Eurogas International Announces Financial Results for the Three Months Ended March 31, 2011
27 Avril 2011 - 11:01PM
Marketwired Canada
Eurogas International Inc. ("Eurogas International" or the "Corporation")
(CNSX:EI) today announced its financial results for the three months ended March
31, 2011.
During the first quarter of 2011, the Corporation incurred a net loss of $0.7
million, or approximately $0.02 per share. This compares with a net loss of $1.1
million, or $0.04 per share in the first quarter of 2010. The Corporation's
March 31, 2011 financial results have been prepared in accordance with
International Financial Reporting Standards ("IFRS"). A detailed analysis of the
significant accounting policies adopted by the Corporation on the transition to
IFRS and a reconciliation of the Corporation's financial position and results of
operations between IFRS and Canadian GAAP are provided in the footnotes to the
Corporation's financial statements which have been filed on the System for
Electronic Document Analysis and Retrieval ("SEDAR") and which may be viewed
under the Company's profile at www.sedar.com or the Corporation's website at
www.eurogasinternational.com.
Eurogas International is conducting exploration and evaluation programs for oil
and natural gas in the shallow Mediterranean waters offshore Tunisia, where it
holds a 45% working interest in the Sfax Permit. The Corporation has entered
into a joint operating agreement with APEX, a production sharing agreement with
the Tunisian state oil company and a prospecting permit with the Tunisian
government. Pursuant to these arrangements, the Corporation and APEX agreed to
undertake exploration, evaluation and extraction operations on the Sfax Permit.
APEX is the operating partner in the joint venture arrangement.
RECENT EVENTS
On January 18, 2011, the Corporation announced that, together with its joint
venture partner, it has declared a condition of a Force Majeure with respect to
the Sfax Permit and the Ras-El-Besh concession. The Corporation and its joint
venture partner believe that the current political uncertainty and civil unrest
in Tunisia adversely affects their ability to continue their exploration and
evaluation activities. Eurogas International believes that the declaration of a
Force Majeure will temporarily suspend activities while the conditions resulting
in the Force Majeure continue. It is anticipated that the Force Majeure
declaration will result in an extension of the term of the Sfax Permit and the
Ras-El-Besh concession for a period of time equivalent to the time that
activities were suspended as a result of the Force Majeure. Once the situation
in Tunisia is resolved, exploration and evaluation activities will resume.
BUSINESS DEVELOPMENTS
The Offshore Sfax Exploration Permit
On behalf of the joint venture, the Corporation is currently reprocessing four
3-D seismic surveys on the Sfax Permit. The Corporation, together with its joint
venture partner, is currently using the reprocessed data to remap the prospects
and leads in order to determine a future course of action with respect to the
drilling of an exploration well to satisfy its outstanding drilling obligation.
Ras-El-Besh Concession
Upon completion of drilling and testing the REB-3 well within the Ras-El-Besh
concession, the joint venture partners requested and received approval from the
Tunisian government to temporarily suspend the well and release the drilling
rig. Agreement by the Tunisian government was subject to the reinterpretation
and remapping of seismic data, after which the joint venture partners were to
determine to either reenter or abandon the well. During the fourth quarter of
2010, the joint venture concluded that it was appropriate to abandon the REB-3
well and pursue other opportunities on the Sfax Permit. The Corporation is
currently evaluating timing, cost and the methodology for the abandonment,
particularly in light of the Corporation's declaration of the Force Majeure.
Pursuant to a settlement agreement between the joint venture partners and Delta
Hydrocarbons B.V., a previous farmout partner in the Sfax Permit, Delta is
committed to fund 50% of any costs associated with abandonment of the REB-3 well
until December 9, 2011.
The Seawolf Litigation
In 2009, the joint venture partners commenced arbitration proceedings against
Seawolf Oilfield (Cyprus) Limited and Seawolf Oilfield Services Limited
(collectively, "Seawolf") under the rules of the London Court of International
Arbitration, seeking damages for misrepresentations and breach of contract in
respect of the drilling of the REB-3 well. In May 2010, the parties reached a
settlement agreement that provides for a US$12 million payment to the joint
venture over an 18 month period. The settlement amount is secured by a letter of
guarantee issued by a recognized international bank. Delta's entitlement
pursuant to the settlement agreement is conditional on Delta meeting its
obligations as defined in the settlement agreement, including the funding of its
pro-rata share of ongoing costs associated with the litigation with Seawolf.
2011 EXPENDITURES
During the first three months of 2011, $0.3 million (three months ended March
31, 2010 - $0.4 million) was capitalized to the Sfax exploration and evaluation
properties.
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Sfax Exploration and
Exploration Ras-El-Besh Evaluation
Permit Concession Properties
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Carrying value, December 31,
2009 $ 2,638,922 $ - $ 2,638,922
Transactions for the three
months ended March 31, 2010
Investments 434,612 245,255 679,867
Changes related to
decommissioning liability - (49,834) (49,834)
Impairment - (195,421) (195,421)
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Carrying value, March 31, 2010 3,073,534 - 3,073,534
Transactions from April 1,
2010 to December 31, 2010
Investments 1,591,467 249,738 1,841,205
Changes related to
decommissioning liability - (29,867) (29,867)
Impairment - (219,871) (219,871)
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Carrying value, December 31,
2010 4,665,001 - 4,665,001
Transactions during the three
months ended March 31, 2011
Investments 328,220 85,688 413,908
Changes related to
decommissioning liability - (32,930) (32,930)
Impairment - (52,758) (52,758)
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Carrying value, March 31, 2011 $ 4,993,221 $ - $ 4,993,221
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WORK PROGRAM FOR THE REMAINDER OF 2011
The Corporation has temporarily suspended its 2011 work program pending
settlement of the events that resulted in the declaration of Force Majeure. Once
activities resume, the Corporation's ability to undertake its future work
programs is dependent on it securing the necessary financial arrangements. At
March 31, 2011, the Corporation had cash and short term investments of $0.8
million compared with cash and short term investments of $1.1 million at
December 31, 2010. The Corporation's current cash resources are insufficient to
meet its forecasted 2011 work program. The Corporation is actively pursuing
alternative financing options, including debt or equity issuances, potential
farmout arrangements, and monetization of certain assets. There can be no
assurance that the Corporation will be successful in these initiatives.
ABOUT THE CORPORATION
Eurogas International Inc. is an independent oil and gas exploration company
listed on the Canadian National Stock Exchange under the symbol EI. Eurogas
International has filed its financial statements and related management's
discussion and analysis for the three month period ended March 31, 2011 with the
Canadian securities regulatory authorities on SEDAR. All documentation may be
viewed under the Company's profile on SEDAR (www.sedar.com), the company website
at www.eurogasinternational.com, or by contacting Eurogas International. For
more information about Eurogas International, please visit the Listings
Disclosure Hall at www.cnsx.ca.
FORWARD LOOKING STATEMENTS
Certain information set forth in these documents, including management's
assessment of each of the Corporation's future plans and operations, contains
forward-looking statements. Forward-looking statements are statements that are
predictive in nature, depend upon or refer to future events or conditions or
include words such as "expects", "anticipates", "intends", "plans", "believes",
"estimates" or similar expressions. By their nature, forward-looking statements
are subject to numerous risks and uncertainties, some of which are beyond the
Corporation's control, including the impact of general economic conditions,
industry conditions, volatility of commodity prices, currency fluctuations,
imprecision of reserve estimates, environmental risks, competition from other
industry participants, the lack of availability of qualified personnel or
management, stock market volatility and ability to access sufficient capital
from internal and external sources. Readers are cautioned that the assumptions
used in the preparation of such information, although considered reasonable at
the time of preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. The Corporation's actual
results, performance or achievement could differ materially from those expressed
in, or implied by, these forward-looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what benefits the
Corporation will derive from them. The Corporation disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by
law.
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