NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA.
Suroco Energy Inc. (TSX VENTURE:SRN) (the "Corporation") is pleased to announce
that it has filed its Audited Consolidated Financial Statements and the related
Management's Discussion and Analysis ("MD&A") for the year ended December 31,
2012 and its Annual Information Form for the year ended December 31, 2012 on the
System for Electronic Document Analysis and Retrieval ("SEDAR").
Copies of these documents can be found on the SEDAR website at www.sedar.com.
Alastair Hill, the Corporation's President and CEO commented, "During 2012 we
successfully grew the Corporation's reserves, particularly in the Proven and
Probable categories due to the 100% success rate in the wells drilled during the
year and the commencement of the Cohembi oilfield pilot water injection project.
The seven wells drilled during the year helped us appraise the northwestern area
of this large oil accumulation and production in the second half of the year
grew by 26% compared to the first half as these new Cohembi oil wells were
brought on stream. New sales points outside of the Putumayo Basin were
established early in the year in order to maintain production and oil sales
consistency in the face of disruptions in the Trans- Andean pipeline which
resulted in higher operating costs due to greater oil trucking distances,
although these costs were partially offset by higher received prices. Operating
costs in the fourth quarter were abnormally high as we recognized and expensed
several non-recurring items including environmental remediation of a legacy oil
spill which existed prior to the Corporation entering the Suroriente Block
contract and the recognition of the full year costs of water disposal in the
Pinuna/Quillacinga oilfield during the fourth quarter. In 2013 we are
forecasting operating costs to be in the range of $30 to $35 per barrel."
Subsequent to the year-end we closed a credit facility for $21 million, which
significantly strengthened our working capital position and has provided us with
an enhanced ability to pursue new opportunities in our focus area in the
Putumayo Basin.
In the first quarter of 2013 production has averaged 1,207 barrels per day net
after royalty to the Corporation and production averaged 1,497 barrels per day
net after royalty for the first 24 days of April. A comprehensive operations
update detailing activities and production will be provided in May."
Financial & Operating Highlights
(All references to $ are United States dollars unless otherwise noted)
3 months ended 12 months ended
December 31 December 31
2012 2011 2012 2011
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Financial
Oil and gas revenue ($) 14,295,642 19,292,833 52,186,372 47,107,509
Funds flow from
operations (1) ($) 1,544,756 9,930,033 16,419,582 18,711,272
Per share - basic ($) 0.01 0.08 0.13 0.15
Per share - diluted
($) 0.01 0.08 0.12 0.15
Net (loss) income ($) (1,107,158) 736,651 6,649,085 574,584
Net (loss) income
attributable to
shareholders ($) (1,812,790) (1,617,953) 1,745,122 (3,959,978)
Per share - basic and
diluted ($) (0.01) (0.01) 0.01 (0.03)
Total assets ($) 78,626,185 64,931,786 78,626,185 64,931,786
Working capital
(deficit) surplus (2)
($) (556,849) 8,996,483 (556,849) 8,996,483
Common shares
outstanding, end of
period
Basic 134,329,734 124,064,942 134,329,734 124,064,942
Diluted (3) 147,839,734 162,429,919 147,839,734 162,429,919
Weighted average common
shares outstanding
Basic 134,329,734 123,478,047 130,133,459 121,778,323
Diluted (3) 138,897,055 123,478,047 134,816,152 121,778,323
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Operational
Average daily net after
royalty production
(barrels of oil per 1,101 838 991 877
Average reference price
- WTI ($ per barrel) 88.01 94.02 94.05 94.88
Operating Netback ($ per
barrel)
Average realized price 94.60 107.45 100.96 96.20
Royalties 7.57 8.60 8.08 7.59
Production and
transportation
expenses 54.39 33.80 39.21 27.52
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Operating Netback 32.64 65.05 53.68 61.09
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Notes:
(1) Funds flow from operations is cash flow from operating activities
before changes in other non-cash working capital items. Funds flow
from operations is not a measure recognized by generally accepted
accounting principles ("GAAP"). See "Non-GAAP Measures" in the MD&A.
(2) Working capital surplus includes current assets less current
liabilities. Working capital surplus is not a measure recognized by
GAAP. See "Non-GAAP Measures" in the MD&A.
(3) In periods where there were losses attributable to shareholders, all
potentially dilutive securities were considered anti-dilutive and
were therefore excluded from the fully diluted number of weighted
average common shares outstanding calculation. All potentially
dilutive securities were considered for the calculation of diluted
number of shares outstanding at the end of period.
Highlights from 2012
-- Increased average production (net after royalty) to 991 barrels of oil
per day ("bopd"), an increase of 13% from the prior year and increased
average fourth quarter production to 1,101 bopd (net after royalty), an
increase of 31% over the prior year.
-- Drilled and placed on permanent production 7 Cohembi wells during the
year.
-- Began water injection for improved recovery within the Cohembi oil field
during December of 2012.
-- Increased production costs on a per barrel basis of approximately 42%
for the year, due mainly to several one-time items.
-- Booked reserves increased during 2012 in all categories:
-- Total proved reserves of approximately 1.6 million barrels of oil
(net after royalty) resulting in a net increase of 81% after
accounting for 2012 production.
-- Total proved plus probable reserves of approximately 2.6 million
barrels of oil (net after royalty), resulting in a net increase of
46% after accounting for 2012 production.
-- Total proved, probable and possible reserves of approximately 3.9
million barrels of oil (net after royalty), resulting in a net
increase of 45% after accounting for 2012 production.
The Corporation is a Calgary-based junior oil and gas company, which explores
for, develops, produces and sells crude oil, natural gas liquids and natural gas
in Colombia. The Corporation's common shares trade on the TSX Venture Exchange
under the symbol "SRN".
Reserves Information
"Proved" reserves are those reserves that can be estimated with a high degree of
certainty to be recoverable. It is likely that the actual remaining quantities
recovered will exceed the estimated proved reserves.
"Probable" reserves are those additional reserves that are less certain to be
recovered than proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the estimated
proved plus probable reserves.
"Possible" reserves are those additional reserves that are less certain to be
recovered than probable reserves. It is unlikely that the actual remaining
quantities recovered will exceed the sum of the estimated proved plus probable
plus possible reserves.
FORWARD LOOKING STATEMENTS
Certain statements included in this press release constitute forward-looking
statements under applicable securities legislation. These statements relate to
future events or future performance of the Corporation. All statements other
than statements of historical fact are forward-looking statements. In some
cases, forward-looking statements can be identified by terminology such as
"may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate",
"predict", "potential", "continue", or the negative of these terms or other
comparable terminology. Forward-looking statements or information in this press
release include, but are not limited to, the characteristics of the
Corporation's oil and natural gas properties, reserve quantities and the
discounted present value of future net cash flows from such reserves, net
revenue, capital expenditures, operating costs, exploration plans and
development plan. In addition, this press release may contain forward-looking
statements attributed to third party industry sources. Undue reliance should not
be placed on these forward-looking statements, as there can be no assurance that
the plans, intentions or expectations upon which they are based will occur. By
their nature, forward-looking statements involve numerous assumptions, known and
unknown risks and uncertainties, both general and specific, that contribute to
the possibility that the predictions, estimates, forecasts, projections and
other forward-looking statements will not occur, which may cause actual
performance and results in future periods to differ materially from any
estimates or projections of future performance or results expressed or implied
by such forward-looking statements. These assumptions, risks and uncertainties
include, among other things, the state of the economy in general and capital
markets in particular; fluctuations in oil prices; the results of exploration
and development drilling, recompletions and related activities; changes in
environmental and other regulations; risks associated with oil and gas
operations and future exploration activities; and other factors, many of which
are beyond the control of the Corporation. You can find an additional discussion
of those assumptions, risks and uncertainties in the Corporation's Canadian
securities filings.
The forward-looking statements contained in this press release are made as of
the date of this press release. Except as required by law, the Corporation
disclaims any intention and assumes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Additionally, the Corporation undertakes no obligation to
comment on the expectations of, or statements made by, third parties in respect
of the matters discussed above. New factors emerge from time to time, and it is
not possible for management of the Corporation to predict all of these factors
and to assess in advance the impact of each such factor on the Corporation's
business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking
statement or information. The forward-looking statements contained herein are
expressly qualified by this cautionary statement. Moreover, neither the
Corporation nor any other person assumes responsibility for the accuracy and
completeness of the forward-looking statements.
Statements relating to "reserves" are deemed to be forward-looking statements or
information, as they involve the implied assessment, based on certain estimates
and assumptions, that the reserves described can be profitable in the future.
There are numerous uncertainties inherent in estimating quantities of proved
reserves, including many factors beyond the control of the Corporation. The
reserve data included herein represents estimates only. In general, estimates of
economically recoverable oil and natural gas reserves and the future net cash
flows therefrom are based upon a number of variable factors and assumptions,
such as historical production from the properties, the assumed effects of
regulation by governmental agencies and future operating costs, all of which may
vary considerably from actual results. All such estimates are to some degree
speculative and classifications of reserves are only attempts to define the
degree of speculation involved. For those reasons, estimates of the economically
recoverable oil and natural gas reserves attributable to any particular group of
properties and classification of such reserves based on risk of recovery and
estimates of future net revenues expected therefrom, prepared by different
engineers or by the same engineers at different times, may vary substantially.
The actual production, revenues, taxes and development and operating
expenditures of the Corporation with respect to these reserves will vary from
such estimates, and such variances could be material.
Estimates with respect to proved reserves that may be developed and produced in
the future are often based upon volumetric calculations and upon analogy to
similar types of reserves rather than actual production history. Estimates based
on these methods are generally less reliable than those based on actual
production history. Subsequent evaluation of the same reserves based upon
production history will result in variations, which may be substantial, in the
estimated reserves.
Consistent with the securities disclosure legislation and policies of Canada,
the Corporation has used forecast prices and costs in calculating reserve
quantities included herein. Actual future net cash flows also will be affected
by other factors such as actual production levels, supply and demand for oil and
natural gas, curtailments or increases in consumption by oil and natural gas
purchasers, changes in governmental regulation or taxation and the impact of
inflation on costs.
FOR FURTHER INFORMATION PLEASE CONTACT:
Suroco Energy Inc.
Alastair Hill
President and Chief Executive Officer
(403) 232-6784
(403) 264-7455 (FAX)
Suroco Energy Inc.
Travis Doupe
VP Finance and Chief Financial Officer
(403) 232-6784
(403) 264-7455 (FAX)
www.suroco.com
(TSXV:SRN)
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