Maha Energy AB Announces Filing of First Quarter 2021 Report and Live Webcast
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Maha Energy AB (publ) (“Maha” or the “Company”) is pleased to report its first quarter results. The report is attached to this press release and available on the Company’s website at www.mahaenergy.ca.
First quarter 2021
- The Company has secured a debt financing of $ 60 million and an equity investment of $ 10 million from the leading Brazilian investment bank BTG Pactual.
- The Tie-3 oil production well tested a combination of 628 BOEPD, (549 BOPD, 0 BWPD and 470 MSCFPD of gas) from the Itaparica and Agua Grande reservoirs. The Sergi tank has not yet been tested.
- Daily oil and gas production for the first quarter of 2021 averaged 3,742 BOEPD (Q1 2020: 3,288 BOEPD)
- Revenue of $ 15.8 million (Q1 2020: $ 11.2 million)
- Net operating income of $ 11.0 million or $ 33.80 per BOE (Q1 2020: $ 7.9 million or $ 27.91 per BOE)
- EBITDA of USD 10.2 million (Q1 2020: USD 6.4 million)
- Net income of 5.5 million USD (Q1 2020: 3.2 million USD)
- Basic earnings per share of $ 0.05 (Q1 2020: $ 0.03)
- Diluted earnings per share of $ 0.05 (Q1 2020: $ 0.03)
- $ 5.7 million cash and cash equivalents balance (Q1 2020: 19.2 million)
|(TUSD, unless otherwise specified)||Q1 2021||Q4 2020||Q3 2020||Q2 2020||Q1 2020||Full year 2020|
|Net daily production (BOEPD)||3,742||2,738||3,580||3,602||3,288||3 301|
|Returned||15 814||8 659||11 226||7 926||11,207||39,018|
|Operating netback||11,031||4,247||7,041||4 377||7 858||23 523|
|EBITDA||10,213||2,720||5 514||3 436||6,434||18 104|
|Net income for the period1||5 538||(15,702)||1,845||407||3 191||(10 259)|
|Earnings per Share – Basic (USD)||0.05||(0.15)||0.02||0.00||0.03||(0.10)|
|Earnings per share – diluted (USD)||0.05||(0.15)||0.02||0.00||0.03||(0.10)|
|Cash and cash equivalents||5 698||6,681||18,034||15 699||19 190||6,681|
Letter to shareholders
Dear friends and dear shareholders of Maha Energy AB,
I am very happy to report another excellent quarter for the company. The steady rise and stabilization of the oil price has of course helped, but we also started the year with good production gains compared to the previous quarter. The recently completed Tie-2 well tested just over 2,000 BOEPDs on the drilling reservoirs, which was well above our expectations. During the first quarter, drilling for Tie-3 provided a pleasant surprise with the discovery of a brand new oil reservoir on the western flank of the Tie field. The evaluation of the “Itaparica” reservoir took some time and was somewhat hampered by unstable flows. However, after persistence, the 42 ° API oil flowed naturally into the rig tanks. Subsequent downhole pressure tests confirmed a new pristine pressure regime and that the Itaparica reservoir appears to have low permeability. The plan for Tie-3 now is to place it on a temporary man-made elevator until the water cutoff increases to a point where it will convert to a water injector.
A preliminary interpretation of the Itaparica suggests that it extends north and west of the Tie oilfield and could open up new reserve volumes in the future. Initial analysis also suggests that Itaparica will respond well to hydraulic stimulation, as will sandstone from Penedo to Tartaruga. Needless to say, this new discovery adds further excitement to the development of the Tie oilfield.
The price of oil recovered well during the quarter and appears to have stabilized around 65 USD / bbl. At these levels, we are generating very healthy corporate net income which allows us to continue our organic growth using internally generated cash flow. Another positive price update is that Petrobras has revised the annual rebate we receive for our crude oil delivered from the Tie field. The discount for the next 12 months has been reduced by $ 3 / bbl, which means our new net discount for 2021 is $ 5.86 / bbl. We continue to work hard to improve our discounts with our other Brazilian customers. In addition, we benefit from the weakness of the Brazilian real (BRL) which has worked in our favor as most of our expenses are in BRL while we are effectively selling our oil in US dollars. Over the past year, the BRL has lost around 25% against the USD.
In Tartaruga, the test of the Maha-1 well is coming to an end – and unfortunately the first results are inconclusive, which means that we still do not understand where the produced water comes from. Until testing and analysis is complete, we will focus on the southern fault block where the existing TTG-1 and TTG-2 wells are producing oil. Along with the future development of Tartaruga, we will have to look into the management of associated gas. It will probably take some time. At the moment we are using six Gas to Wire (GTW) generators and we are evaluating other options in addition to expanding the GTW footprint to Tartaruga.
In 2017, we secured a SEK 300 million bond to purchase and develop the Tie field. The bond matured at the end of May of this year, and in order to continue our growth, we refinanced the bond with new debt at the end of March. As such, I am very happy to report that we have prepaid the loan and have now secured sufficient capital to continue our growth in Oman and the United States. At current oil prices, US assets are starting to generate healthy returns, and although ultimate recoveries per well are modest, the predictability of oil reservoirs makes future wells very low risk. In Oman, we will place long lead equipment orders to begin drilling in early 2022.
As vaccinations continue, we look forward to some resemblance to normal. Our short term goal is to drill Tie-4, our first horizontal well in the Tie field. Tie-4 will target the Agua Grande reservoir and will eventually be supplemented by an electric submersible pump (ESP). Once Tie-4 is drilled, the Tie field is expected to reach its expected production capacity. A water injector will be drilled immediately after the Tie-4 to support significant pressure maintenance in the field. We will also be drilling at least four wells in the Illinois Basin to maintain production levels there as well.
Finally, we are very happy to see the publication of our first sustainability report on April 19, 2021. Our newly formed ESG team did an excellent job putting together all the information for this colorful report. You can view it on our website www.mahaenergy.ca. In addition, and as part of the due diligence conducted for the recently completed financing, a full independent ESG audit was performed on our Brazilian operations. It is reassuring that we have succeeded. But as with most things, there is always room for improvement, so the team is in full swing to address the improvements highlighted in the audit report.
Four years ago, our initial obligation enabled us to quadruple production volumes, and with new funding secured, the race is on to continue our growth in all three operational areas. So stay with us – the best is yet to come.
As always, a big thank you to all of the Maha employees who I know work so hard for all of us. And to all the other shareholders – thank you for your continued support.
Webcast Q1 today at 4:00 p.m. CET
A live webcast will take place today, May 26 at 4:00 p.m. CET (Swedish time) to present the quarterly results and provide an operational update. A link to the webcast is available on the Company’s website: www.mahaenergy.ca. Questions posted on the day of the presentation should be asked directly in the YouTube Comments / Questions field. The webcast will be broadcast live on the Nyhetsbyrån Direkts Youtube channel and hosted by Mr. Kaarlo Airaxin of Laikas, and will feature Maha CEO Jonas Lindvall and CFO Andres Modarelli.
This information is information that Maha Energy AB (publ) is required to make public in accordance with the EU Market Abuse Regulation. The information has been submitted for publication, through the contact person below, at 7:30 a.m. CET on May 26, 2021.
For more information please contact:
Jonas Lindvall (CEO)
Phone: +46 8 611 05 11
Andres Modarelli (CFO)
Phone: +46 8 611 05 11
Victoria Berg (investor relations)
Phone: +46 8 611 05 11
Maha Energy AB (publ) is an international upstream oil and gas company whose business activities include the exploration, development and production of crude oil and natural gas. The strategy is to target and develop underperforming hydrocarbon assets globally. Maha operates four oil fields: Tartaruga and Tie in Brazil, Powder River (LAK Ranch) and Illinois Basin in the United States. The shares are listed on Nasdaq Stockholm (MAHA-A). The head office is in Stockholm, Sweden, with a technical office in Calgary, Canada, as well as operations offices in Grayville, Illinois, United States and Rio de Janeiro, Brazil. For more information, please visit our website www.mahaenergy.ca
1 Fourth quarter 2020 and full year 2020 net income includes an impairment charge of $ 21.0 million.