REG - Canadian O'Seas Petr - COPL 2022 Financials Results and Operations Update

Canadian Overseas PetroleumAnnouncement

03/04/2023 07:15

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RNS Number : 1028V  Canadian Overseas Petroleum Ltd  03 April 2023

COPL 2022 Financials Results and Operations Update

 

London, United Kingdom; Calgary, Canada: April 3, 2023 - Canadian Overseas
Petroleum Limited and its affiliates ("COPL" or the "Company") (XOP: CSE)
& (COPL: LSE), an international oil and gas exploration, production and
development company with production and development operations focused in
Converse and Natrona counties, Wyoming, USA, is pleased to announce its
financial results for the fourth quarter ending December 31, 2022.

Fourth Quarter 2022 Financial Highlights:

·    The Company's working interest average crude oil sales before
royalties averaged 1,177 bbls/d as compared to 1,107 bbls/d in the third
quarter of 2022. The Company has encountered operational interruptions at
certain high impact wells. The interruptions were as a consequence of the
miscible flood program, which involves the injection of high pressure solvent
which both raises the reservoir pressure and mobilizes the oil in place. A
bottleneck which has negatively impacted production is the field's originally
undersized low pressure gas gathering system ("GGS"), which is not capable of
accommodating the high pressure and volume of gas arriving at the producing
wells and delivering to the gas plant for recycle. This circumstance led to
the requirement to restrict the wells. The Company plans to initiate phase 1
of the GGS upgrade, which will address much of the low-pressure GGS
restrictions in the center of the field, with future phases to branch out to
outlying wells.

·    Petroleum sales, net of royalties were $6.7 million as compared to
$7.1 million in the third quarter of 2022. The decrease is due mainly to the
reduction in commodity prices over the fourth quarter of 2022.

·    In aggregate the Company incurred a net realized hedging loss of $2.2
million as compared to $2.3 million in the third quarter of 2022.
Specifically, it realized a loss of $2.7 million on crude oil hedge contracts
as compared to $3.4 million in the third quarter of 2022, which was offset by
a realized a gain of $0.5 million on butane hedge contracts as compared to
$1.1 million in the third quarter of 2022. The butane hedges were put in place
to protect the liquid purchases required for the miscible flood injection
program.

·    In December 2022, recent WTI weakness provided the opportunity for
the Company to execute hedge restructuring without a cash cost to unwind
certain positions and in a manner that will minimize near term hedge losses
that have constrained COPL's pace of development. The restructuring has
increased COPL America's exposure to WTI upside and stabilized operating cash
flow in the first half of 2023. It also provides for a level of revenue
protection with puts at $60/bbl on 750 bbls/d and maintains cost protection
for butane injections at our Shannon Miscible Flood at a quantum that matches
COPL America's injection plans during the first half of 2023.

·    The operating netback was $23.38/bbl, before the net realized loss on
crude oil and butane commodities contracts as compared to $38.26/bbl, in the
third quarter of 2022. The decrease is due mainly to the reduction in WTI from
$91.56/bbl in the third quarter of 2022 as compared to $82.65/bbl in the
fourth quarter of 2022 and increased operating costs due mainly to weather
related difficulties.

·    On December 30, 2022, the Company issued a total of $4.0 million
principal convertible bonds for $3.2 million net issue proceeds to further its
corporate strategy of its US operations.

·    In an effort to manage its capital resources and liquidity, the
Company reduced capital expenditures in the period to $2.3 million.

·    A cash position of $4.0 million as at December 31, 2022 as compared
to $5.7 million as at September 30, 2022.

The financial results and associated regulatory filing documents, including
the Financial Statements and the Management's Discussion and Analysis as at
and for the year ending December 31, 2022, can be viewed under the Company's
name at www.sedar.com (http://www.sedar.com) or at the Company's website at
www.canoverseas.com (http://www.canoverseas.com) . The Company encourages
interested parties to read the Management's Discussion and Analysis along with
the Financial Statements and accompanying notes.

Corporate Matters:

The Company has improved its working capital position further by issuing
2,292,370 common shares (the "Common Shares") on March 31, 2023 for settlement
of approximately $0.2 million of accounts payable to arm's length creditors of
the Company.  A total of $2.4 million of accounts payable has been settled
with Common Shares through this plan to date, all above the LSE market price
since closing of the convertible bond financing announced March 20, 2023.

Applications will be made to the Financial Conduct Authority ("FCA") for these
Common Shares to be admitted to the Official List and to the London Stock
Exchange for the Common Shares to be admitted to trading on the London Stock
Exchange's main market for listed securities within the next twelve months, in
accordance with Listing Rule 14.3.4.

Following these issues of Shares the Company has a total of 345,418,705 Common
Shares issued and outstanding. There are no Common Shares held in treasury and
therefore the total number of voting rights in the Company is 345,418,705.
This figure may be used by shareholders in the Company as the denominator for
the calculations by which they will determine if they are required to notify
their interest in, or a change to their interest in, the share capital of the
Company under the FCA's Disclosure Guidance and Transparency Rules.

Operations:

Following the closing of the Company's recent convertible bond financing, the
Company's affiliate COPL America has commenced :

·    procurement for pipe and other long lead items required for the GGS
Phase 1 upgrades, which the Company intends to install during the second
quarter of 2023; and

·    well conversions from flowing to pumping-flowing at certain high
productivity wells in the Shannon miscible flood to increase production
efficiencies and reduce paraffin induced production downtime.

Each of these initiatives are intended to improve production levels by
resolving constraints and bottlenecks that have limited COPL's pace of
development over the year 2022.

About the Company:

COPL is an international oil and gas exploration, development and production
company actively pursuing opportunities in the United States with operations
in Wyoming.

The Company operates three Units: Cole Creek 100% WI, Barron Flats Shannon
(Miscible) 85% WI and the Barron Flats Federal (Deep) 85% WI in addition to
non-unitized lands 100% WI.

The Company's Wyoming operations are one of the most environmentally
responsible with minimal gas flaring and methane emissions combined with
electricity sourced from a neighbouring wind farm to power production
facilities.

 

For further information, please contact:

Mr. Arthur Millholland, President & CEO

Mr. Ryan Gaffney, CFO

Canadian Overseas Petroleum Limited

Tel: + 1 (403) 262 5441

 

Cathy Hume

CHF Investor Relations

Tel: +1 (416) 868 1079 ext. 251

Email: cathy@chfir.com (mailto:cathy@chfir.com)

 

Charles Goodwin

Yellow Jersey PR Limited

Tel: +44 (0) 77 4778 8221

Email: copl@yellowjerseypr.com (mailto:copl@yellowjerseypr.com)

 

Peter Krens

Equity Capital Markets, Tennyson Securities

Tel: +44 (0) 20 7186 9033

 

Alex Wood & Keith Dowsing

Joint Broker

Alternative Resource Capital

AW: +44 (0) 7559 910872

KD: +44 (0) 7559 910873

 

Andrew Chubb / Neil Passmore

Advisors/Joint Brokers

Hannam & Partners

+44 (0) 20 7907 8500

 

 

 

 

 

 

 

 

 

The Common Shares are listed under the symbol "XOP" on the CSE and under the
symbol "COPL" on the London Stock Exchange.

This news release contains forward-looking statements. The use of any of the
words "initial, "scheduled", "can", "will", "prior to", "estimate",
"anticipate", "believe", "should", "forecast", "future", "continue", "may",
"expect", and similar expressions are intended to identify forward-looking
statements. The forward-looking statements contained herein are based on
certain key expectations and assumptions made by the Company, including, but
not limited to, the ability to raise the necessary funding for operations,
delays or changes in plans with respect to exploration or development projects
or capital expenditures. Although the Company believes that the expectations
and assumptions on which the forward-looking statements are based are
reasonable, undue reliance should not be placed on the forward-looking
statements since the Company can give no assurance that they will prove to be
correct since forward-looking statements address future events and conditions,
by their very nature they involve inherent risks and uncertainties most of
which are beyond the control of Canadian Overseas Petroleum Ltd. For example,
the uncertainty of reserve estimates, the uncertainty of estimates and
projections relating to production, cost overruns, health and safety issues,
political and environmental risks, commodity price and exchange rate
fluctuations, changes in legislation affecting the oil and gas industry could
cause actual results to vary materially from those expressed or implied by the
forward-looking information.  Forward-looking statements contained in this
news release are made as of the date hereof and Canadian Overseas Petroleum
undertakes no obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information, future
events or otherwise, unless so required by applicable securities laws.

 

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