Average gross (100%) oil production re-established at 11,700 bbl/d in the third quarter versus 4,000 bbl/d for the second quarter of 2020; success at and continued focus on minimizing costs.

Oryx Petroleumhas announced its financial and operational results for the three and nine months ended September 30, 2020. 

Financial Highlights:

• Total revenues of $22.0 million on participating interest sales of 698,900 barrels of oil ('bbl') and an average realised sales price of $26.35/bbl for Q3 2020
• 38% decrease in revenues versus Q3 2019, attributable to a 43% decrease in realised sales price
• The Corporation has received payment in accordance with Production Sharing Contract entitlements for all deliveries into the Kurdistan Oil Export Pipeline through October 2019 and for the months of March through September of 2020
• Payments for the months of November 2019, December 2019, January 2020, and February 2020 remain outstanding with the Contractor share totalling $39 million. The Corporation is actively pursuing the outstanding payments but timing of full settlement is undefined. The Corporation continues to expect future monthly sales invoices to be settled in the month following delivery
• Operating expenses of $7.1 million ($10.11/bbl) and an Oryx Petroleum Netback of $7.87/bbl for Q3 2020
• Profit of $30.1 million ($0.05 per common share) in Q3 2020 versus profit of $18.3 million in Q3 2019 ($0.03 per common share)
• The increase in profit in Q3 2020 compared to Q3 2019 is primarily attributable to a $26.9 million gain recorded on the settlement of the loan facility with AOG International Holdings Limited partially offset by a $7 million decrease in net revenues and a reduction of $7.5 million in the non-cash gain resulting from the decrease in the fair value of the contingent consideration obligation
• Net cash generated by operating activities was $3.6 million in Q3 2020 versus $9.7 million in Q3 2019, comprised of Operating Funds Flow of $3.7 million less a $0.1 million increase in non-cash working capital
• Net cash used in investing activities during Q3 2020 was $3.3 million including payments related to facilities costs and drilling preparations in the Hawler license area
• $11.0 million of cash and cash equivalents as of September 30, 2020

Operations Update:

• Average gross (100%) oil production of 11,700 bbl/d (participating interest 7,600 bbl/d) in Q3 2020
• Average gross (100%) oil production of 13,300 bbl/d (participating interest 8,700 bbl/d) for October 2020
• Operations at the Banan field in the Hawler license area restarted in July 2020 following improvement in oil price
• In October 2020, an acid stimulation treatment was performed on the Demir Dagh-3 horizontal well completed in the Cretaceous reservoir. The well is currently being operated intermittently to determine the maximum sustained rate at which it can be produced without promoting excessive production of associated gas. The well may be recompleted in the future in order to obtain more effective isolation of the oil producing completion from the associated gas cap
• Renovation of a previously constructed well pad in the Zey Gawra field has been completed in preparation for the spudding of a new well targeting the Tertiary reservoir before year end
• The worldwide outbreak of the COVID-19 virus, including within Iraq, has not caused any significant disruption of production operations. The Corporation is continuing to take precautions to protect its employees and contractors but does not expect that the ongoing virus outbreak will restrict operations

Liquidity Outlook:

• The Corporation expects cash on hand as of September 30, 2020, cash receipts from net revenues from export sales exclusively through the Kurdistan Oil Export Pipeline, and proceeds from the short-term credit facility provided by Zeg Oil and Gas Limited ('ZOG') will allow it to fund its committed capital expenditure and forecasted operating and administrative costs through the end of 2021 and to reduce obligations currently due to suppliers
• In the prevailing oil price environment, contingent consideration obligations are anticipated not to become payable before 2022

Commenting today, Oryx Petroleum's Chief Executive Officer, Vance Querio, stated:
"During the third quarter OP Hawler Kurdistan Limited continued to operate safely, without any recordable incidents, notwithstanding restrictions imposed due to the COVID-19 outbreak. We are very fortunate that although we have had several employees test positive for COVID-19 during the quarter, none have suffered from serious symptoms and our operations have been unaffected by the occasional absence of a quarantined employee.

In addition to conducting our routine production operations, we have been busy during this past quarter planning our fourth quarter rig activity and resurrecting and renewing our portfolio of service contracts so that we will be able to work unimpeded in the new year. We have restored the normal rotation of most of our drilling, HSE and security consultants and are planning to move a rig into the Banan field in the coming days to replace a leased jet pump in the Banan-4 well with a more cost effective progressive cavity pump that we have purchased.

Following the pump replacement workover in the Banan field, we look forward to getting a rig back in the Zey Gawra field to drill our first well into the Tertiary reservoir there before continuing with additional development and appraisal activities.

Despite the current challenging oil price environment, which we expect will prevail for the duration of 2021, we intend to conduct a capital program in 2021 in order to increase our production capacity and further reduce our operating costs."

Map source: Oryx Petroleum

Kurdistan Region - Hawler

• Oryx Petroleum has a 65% participating and working interest in, and is the operator of, the Hawler license area.
• The Hawler license area has four discoveries on four structures which are estimated by independent reserves evaluator Netherland, Sewell & Associates, Inc. as of December 31, 2019 to contain a total of 103 MMbbl of gross (working interest) proved plus probable oil reserves in a report dated February 14, 2020.
• In 2014, wells were spudded and tested to appraise the reservoirs, commence production (June) and increase wellhead production capacity. A 3D seismic data acquisition campaign covering a portion of the license area was also completed in 2014 to provide additional information to further refine development plans.
• In 2015, Oryx Petroleum continued its appraisal drilling at Demir Dagh and commissioned the Hawler production facilities at Demir Dagh with initial gross (100%) oil production capacity of 40,000 bbl/d. These facilities replaced the 20,000 bbl/d temporary production facilities installed in 2014.
• In 2016, Oryx Petroleum commenced oil sales via pipeline (March) from the Hawler license and commenced production and sales from the Zey Gawra field (December).
• In 2017, Oryx Petroleum advanced appraisal of the Zey Gawra field with the successful drilling of the Zab-1 sidetrack well in the Zey Gawra Cretaceous reservoir. Production was also supplemented with a greater contribution from the Zey Gawra-1 sidetrack well in the Cretaceous reservoir.
• In 2018, Oryx Petroleum commenced production and sales from the Banan field (three wells from both Tertiary and Cretaceous reservoirs) and advanced appraisal from the Zey Gawra field (three wells targeting the Cretaceous reservoir)
• In 2019, Oryx Petroleum successfully completed four producing wells: the drilling of the Banan-5, Banan-6 and Banan-7 wells targeting the Cretaceous reservoir of the Banan West fault block; and the horizontal sidetrack of the previously drilled Demir Dagh-3 well targeting the Cretaceous reservoir.
• In Q4 2019 gross (100%) production from the Hawler license area averaged 11,100 bbl/d.

KeyFacts Energy: Oryx Petroleum Iraq country profile