ShaMaran reduces Capex, Engages with Bondholders
By John Lee.
Canadian oil development and exploration company ShaMaran Petroleum has announced that all non-essential capital expenditures in the Atrush block (pictured) have been cancelled or postponed, while it engages with bondholders to seek additional balance-sheet flexibility.
The company's operations remain heavily impacted by the continued closure of the Iraq-Turkey pipeline (ITP), connecting Iraq's northern fields with the Turkish port of Ceyhan.
Full statement from ShaMaran Petroleum:
ShaMaran Petroleum Corp. (TSXV: SNM) (Nasdaq First North Growth Market: SNM) ("ShaMaran" or the "Company") announces an operational and corporate update.
The Company's operations remain heavily impacted by the continued closure of the Iraq-Turkey pipeline ("ITP"), which has resulted in either a partial or complete shutdown of many fields located in the Kurdistan region of Iraq ("KRI"). ShaMaran understands that negotiations between officials in Iraq and Turkey about re-opening the ITP started in late June and will continue in the weeks ahead. The recent passage of the Iraq federal budget for 2023-2025, including a production commitment from the Kurdistan Regional Government ("KRG"), should enable regular monthly budget transfers from Iraq to the KRG, as well as normalization of relations between the region and the Federal Government of Iraq. The Company believes that a speedy re-opening of the ITP and resolution of the related outstanding commercial issues between international oil companies ("IOCs") and the KRG will benefit all parties involved.
Since the ITP shutdown, ShaMaran and its operating partners have engaged in a number of initiatives aimed at cutting costs (both operating and capital expenditures) for the Company's two assets at Atrush and Sarsang. The current cost base run-rate has been reduced significantly below the original 2023 Work Plan and Budgets approved by the Ministry of Natural Resources of the KRG. All non-essential capital expenditures in the Atrush block have been cancelled or postponed for the remainder of the year, and a significant number of redundancies have been implemented by Taqa Atrush B.V., the Atrush operator, while retaining the capability to re-start field operations upon re-opening of the ITP and resolution of outstanding commercial issues. As announced by HKN Energy Ltd. ("HKN"), Sarsang production has continued since late April 2023 on a reduced, ad-hoc basis with sales to local refineries. HKN has cut remaining 2023 capital expenditures by over 75% with more opportunities for reduction being considered, alongside a significant and ongoing curtailment of operating expenditures and general and administrative expenses.
ShaMaran is actively pursuing further cost-reduction initiatives and encouraging our operating partners to pursue additional local sales to improve liquidity. The Company will also be engaging with its bondholders to seek additional balance-sheet flexibility given the current pipeline and payment situation in the KRI.
About ShaMaran Petroleum Corp.
ShaMaran is a Canadian independent oil and gas company focused on the Kurdistan region of Iraq. The Company holds a 27.6% working interest in the Atrush Block through its wholly-owned subsidiary General Exploration Partners, Inc. and an 18% interest (22.5% paying interest) in the Sarsang Block through its wholly-owned subsidiary ShaMaran Sarsang A/S. The Company is listed in Toronto on TSX Venture Exchange and in Stockholm on Nasdaq First North Growth Market (ticker "SNM"). ShaMaran is part of the Lundin Group of Companies.
Important Information
This is information that ShaMaran is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication through the agency of the contact persons set out above on July 12, 2023, at 7:00 a.m. CET.
(Source: ShaMaran)