News

Mar 29, 2012 - 02:00 ET Antrim Energy Inc. Reports 2011 Results and Reserves

CALGARY, ALBERTA--(Marketwire - March 29, 2012) -

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Antrim Energy Inc. ("Antrim") (TSX:AEN)(AIM:AEY), an international oil and gas exploration and production company, today released its 2011 year-end financial and operating results. The results include a summary and evaluation of reserves that have been independently assessed by McDaniel & Associates Consultants Ltd. in accordance with the standards specified by National Instrument 51-101.

All financial figures are audited and in US dollars except for quarterly figures which are unaudited.

2011 Highlights:

  • Causeway Field Development Plan (FDP) approved by DECC - first oil expected Q3 2012
  • Drilled first Erne well and second Erne sidetrack well in the Greater Fyne Area
  • TAQA Farm-in on Contender Prospect
  • Awarded Irish offshore option
  • Closed bought deal financing of $52 million

2012 Highlights:

  • Sale of Antrim Argentina to Crown Point Ventures Ltd.
  • Agreement with Valiant to develop Fionn Field (Central Causeway)
  • Antrim drills East Fyne appraisal well with Premier Oil
  • Current unrestricted cash position of $43 million and no bank debt

Antrim completed 2011 with a healthy cash position of $64.4 million (including $17.2 million in restricted cash), no bank debt and proved plus probable reserves of approximately 18.7 million barrels of oil equivalent ("boe"), equating to a 46% decrease from 2010. The reduction in reserves was due to the farm out of a 39.9% working interest in UK Licence P077 Block 21/28a (the "Fyne Licence") to Premier Oil UK Ltd ("Premier"), the sale of a 30% working interest in UK Licences P077 Block 211/22a South East Area and P1383 Block 211/23d (the "Causeway Licences") to Valiant Petroleum plc ("Valiant") and technical revisions to the Causeway reserves following a change in strategy for field development. 

Sale of Antrim Argentina

On March 26, 2012, Antrim and Crown Point Ventures Ltd. ("Crown Point"), an Argentine-focused oil and gas company listed on the TSX Venture Exchange, announced that they had entered into an arrangement agreement (the "Arrangement Agreement") whereby Crown Point will acquire all of the issued and outstanding common shares ("Antrim Argentina Shares") of Antrim's Argentina subsidiary, Antrim Argentina S.A ("Antrim Argentina"), which holds all of Antrim's Argentine oil and gas assets, by way of plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement"). 

Under the terms of the Arrangement, it is expected that Crown Point will directly or indirectly acquire all of the issued and outstanding Antrim Argentina Shares for a total consideration of approximately Cdn$53.75 million comprised of Cdn$10.26 million in cash (subject to certain adjustments) (the "Cash Consideration") and the issuance of 35,761,307 common shares of Crown Point ("Crown Point Shares") at a deemed price of Cdn$1.216 per Crown Point Share. Pursuant to the terms of the Arrangement, the Crown Point Shares will be distributed by Antrim to the holders of Common Shares on a pro rata basis as a return of capital.

Antrim's interest in its Tierra del Fuego Concessions is subject to certain rights of first refusal by third parties ("ROFR"). In the event that the ROFR is exercised, the consideration under the ROFR will be paid to Antrim, no distribution will be made to Antrim Shareholders and the Cerro de Los Leones property will be transferred to Crown Point for a fixed cash consideration which will be paid to Antrim on closing.

The Arrangement remains subject to certain regulatory approvals, including the approval of holders of at least two-thirds of the Antrim common shares, the approval of the Alberta Court of Queen's Bench, and the approval of the TSX Venture Exchange to the listing of the additional Crown Point Shares. 

Antrim decided to divest of its oil and natural gas interests in Argentina to focus on higher return opportunities in the UK North Sea. As a result of the decision to divest, the Company's Argentina segment assets and liabilities have been reclassified as held for sale and the operations have been accounted for as discontinued operations. Comparative figures have been reclassified to conform with this presentation.

Fyne Licence

The Fyne Licence includes the Fyne, Dandy and Area 4 Field. Total proved plus probable reserves at December 31, 2011 remained at 23.3 million barrels of oil ("boe") (gross), unchanged from 2010. The transfer of the 39.9% of Antrim's 75% working interest to Premier reduced Antrim's working interest to 35.1% and corresponding net proved plus probable reserves from 17.5 million boe in 2010 to 8.2 million boe in 2011. The Fyne Licence represents 65% of the Company's total proved plus probable reserves as at December 31, 2011. 

On February 6, 2012, the Company announced that the East Fyne appraisal well 21/28a-11, which commenced drilling on January 16, 2012, was plugged and abandoned. The well was designed to de-risk the eastern extent of the Fyne Field, however the thickness of the oil bearing sand was at the lower end of Antrim's estimate. Antrim's share of drilling and abandonment costs was covered by Premier's $48 million carried contribution under the Earn-In Agreement. Antrim is now incorporating the results of the East Fyne well into its reserve estimates and updating field development options. The less than expected results of this well may have a material impact on the reserves and net present values for the Fyne Field. Insufficient data exists at this time to properly assess whether there may be an impairment to the carrying amount of those assets. In addition, Premier is currently evaluating their project economics and retains the right to sell back the previously acquired 39.9% working interest at a nominal price. 

Antrim continues to work with Premier on the identification of export routes for production from the Fyne Field. The currently preferred production system will handle approximately 20,000 barrels of oil per day ("bopd"), with potential capacity add-ons to handle additional volume from satellite fields. First production is anticipated in the middle of 2014. 

The original Fyne Licence expired on November 25, 2011. The Department of Energy and Climate Change ("DECC") agreed to a three-year extension to November 25, 2014 on the condition that a field development plan ("FDP") for the Fyne Field is submitted by June 25, 2012. If the Fyne Field FDP is not submitted by that date, or an extension obtained from DECC, the Fyne Licence could be revoked. First production must be achieved from any of the three identified Prospective Areas (Fyne Field, Dandy Field and Area 4 Field) within the three year license extension period in order for that Prospective Area to become a Producing Area and the licence to continue. If first production is not achieved in a Prospective Area by November 25, 2014, the licence relative to that Prospective Area will expire. Although the Company expects to submit a Fyne Field FDP by June 25, 2012 and to achieve first production by 2014, there is no assurance that the Company will be successful in doing so.

Greater Fyne Area

Pursuant to an option in the EIA for the Fyne Licence, Antrim farmed-out a 50% working interest in Licence P1875 Block 21/29d (the "Erne Prospect") to Premier.

In the fourth quarter of 2011, Antrim completed the drilling of the Erne discovery well 21/29d-11 and sidetrack well 21/29d-11Z (Antrim 50%). Post-well analysis of the wells by Antrim's independent reserve evaluation engineers did not result in any reserves being assigned at this time. As the carrying value of the asset is not expected to be recovered from future production, an impairment charge of $10.3 million was recognized during the year. 

The first and second Erne wells have high-graded and de-risked other drilling prospects in the Upper Tay Formation near Erne and along the same trend on Antrim-interest licences. With this information, Antrim is re-prioritizing its future drilling plans, focusing on both the Upper Tay and Middle Tay drilling targets.

Premier retains the right to participate up to 50% in future Greater Fyne Area exploration programs.

Causeway Licences

The Causeway Licences' total proved plus probable reserves decreased by 20% from 15.6 million boe(gross) to 12.5 million boe (gross) as at December 31, 2011 due to technical revisions following a change in strategy for field development. Due to these revisions and the transfer of the 30% of working interest to Valiant, net reserves to Antrim as at December 31, 2011 are 4.4 million boe (net reserves to Antrim as at December 31, 2010 were 10.2 million boe). 

In December 2011, DECC assigned separate field designations to the Fionn Field (previously referred to as the Central Causeway fault block) and the Causeway Field (previously referred to as the East Causeway and Far East Causeway fault blocks). This allows for separate Small Field Allowance tax credits to be applied for each field. 

Antrim announced on December 28, 2011, the FDP for the Causeway Field was approved by DECC. The FDP includes a production well and a water injection well, with first oil production anticipated in the third quarter of 2012. Hydrocarbons will be transported to and processed at the Cormorant North production platform operated by TAQA Bratani Limited ("TAQA") before being exported to the Sullom Voe terminal for sale. Antrim's development costs for its 35.5% working interest are estimated at $36.3 million, net of the carried contribution received from the sale of a 30% interest to Valiant. 

Kerloch Licence

Antrim signed a farm-out agreement with TAQA related to P201 Block 211/22a North West Area (the "Kerloch Licence") whereby TAQA agreed to drill an exploration well to earn an interest in the licence. 

TAQA acquired 60% interest and assumed operatorship of the southern sub-area (the "Contender Area") of the Kerloch Licence and will drill the exploration well on the Contender prospect from the Cormorant North platform. The well will target the Jurassic Brent sequence of sandstones at a projected drilling depth of 16,900 feet, less than two kilometres east of the Cormorant North Field. The well is expected to spud in the second quarter of 2012 and drilling will be funded by TAQA. Under the farm-in agreement, Antrim's interest dropped from 21% to 8.4% in the Contender Area. Upon successfully drilling the exploration well, TAQA will earn 35% in the northern sub-area (the "Kerloch Area"), reducing Antrim's interest there from 21% to 13.65%.

Cyclone Prospect

Licence P1784 Block 21/7b (Antrim 30%) is located in the Central North Sea north of the Greater Fyne Area. The block contains the "Cyclone" and the "Typhoon" Tertiary Cromarty prospects at approximately 5,000 and 5,600 feet respectively, in a region that is mature from both exploration and field infrastructure perspectives. The licence was acquired jointly with Premier (70%, operator) with a firm well commitment. An exploration well on the Cyclone Prospect has been approved by the joint venture partners and is planned to be drilled in the third quarter of 2012. The Typhoon Prospect would be a probable follow up to any discovery at Cyclone. 

Ireland

On October 18, 2011, Antrim announced that it had been awarded a Frontier Licence Option by the Department of Communications, Energy and Natural Resources of Ireland, under the Irish 2011 Atlantic Margin Licensing Round. The Licence option area covers Blocks 44/4, 44/5 (part), 44/9, 44/10, 44/14, 44/15, an area of approximately 1,409 square km located in the Porcupine Basin approximately 110 km off the southwest coast of Ireland. The option allows Antrim two years to qualify the blocks for a full Exploration Licence. Antrim has committed to a seismic work program of $0.5 million.

Financing

On March 17, 2011, Antrim issued 48,191,700 common shares at a price of Cdn $1.07 per common share for gross proceeds of Cdn $51.6 million (net proceeds Cdn $48.5 million).

UK Tax Allowance

On March 21, 2012, The UK government announced that the maximum amount of the small field allowance introduced in Finance Act 2009 will be doubled from £75 million to £150 million for fields which have reserves in place of 45 mmbbls or less, reducing to no allowance at 50 mmbbls. The results of this change in the maximum allowance are expected to provide Antrim with additional tax benefits for the development of certain qualifying UK fields. 

Discontinued Argentina Operations

With the strategic decision to sell its Argentina business, the Company's Argentina operations have been accounted for as discontinued operations. 

Argentina generated oil and gas revenue, net of royalties, of $10.2 million for the year ended December 31, 2011 which decreased from $10.8 million in 2010. Revenue decreased as a result of lower oil and gas production partially offset by higher oil and gas prices received. Production in Argentina decreased to 1,564 barrels of oil equivalent per day ("boepd") in 2011 from 1,783 boepd in 2010 due to a natural decline combined with gas plant maintenance and temporary oil storage problems.

Argentina total proved plus probable reserves decreased by 15% from 27.7 million boe (gross) to 23.5 million boe (gross) as at December 31, 2011 due to production and performance. Antrim's working interest share of proved plus probable reserves correspondingly dropped from 7.1 million boe to 6.1 million boe.

Antrim's average gas price for the fourth quarter of 2011 was $2.12 per thousand cubic feet ("mcf") compared to $1.80 per mcf for the same period in 2010, an 18% increase. In the fourth quarter of 2011, oil prices averaged $63.94 per barrel compared to $54.60 per barrel for the same period in 2010, a 17% increase. Antrim's gas price averaged $2.17 per mcf for the year ended December 31, 2011 compared to $1.84 per mcf in 2010. Oil prices averaged $59.78 per barrel in 2011 compared to $49.34 per barrel in 2010. 

Antrim's field netbacks in Argentina, based on sales, were $10.07 (2010 - $7.51) per boe and $9.31 (2010 - $9.06) for the three and twelve month periods ended December 31, 2011. The increase in the 2011 field netbacks, as compared to 2010, was due to higher product prices partially offset by higher production and operating expenses, royalties and export taxes.

Reserves Summary

The following table summarizes Antrim's reserves as at December 31, 2011:

Antrim's Interest in Reserves as at December 31, 2011
(based on forecast price and cost assumptions)
  Oil Gas NGL Total
Category mbbls mmcf mbbls mboe
Proved 1,301 17,987 245 4,544
Proved plus probable 13,565 28,629 330 18,667
Proved plus probable plus possible 26,902 34,241 335 32,943
     

Present Value Cash Flow Before Income Tax as at December 31, 2011 ($ 000's)
(based on forecast price and cost assumptions)
  PV PV PV
Category 0% 5% 10%
Proved 38,323 32,379 27,624
Proved plus probable 523,137 424,917 348,797
Proved plus probable plus possible 1,516,710 1,171,273 922,745
   

Antrim's reserve information and reports pursuant to National Instrument 51-101 are available in Antrim's Annual Information Form filed on SEDAR at www.sedar.com. This reserves information includes the Company's interest in Argentina reserves, which are to be sold in 2012.

Financial and Operating Results from Continuing Operations

  Three Months Ended
December 31
  Year Ended
December 31
  2011 2010   2011 2010
Financial Results ($000's except per share amounts)          
Cash deficiency from operations(1) 4,890 7,275   3,747 5,742
Cash deficiency from operations per share(1) 0.03 0.05   0.02 0.04
           
Net loss - continuing operations 15,975 2,842   55,110 7,586
Net loss 14,951 2,363   52,970 5,251
Net loss per share - basic, continuing operations 0.09 0.02   0.32 0.04
           
Total assets 239,177 229,912   239,177 229,912
Working capital, excluding assets held for sale 52,674 26,658   52,674 26,658
Assets held for sale, net of liabilities held for sale 27,471 -   27,471 -
Expenditures on petroleum and natural gas properties - continuing operations
10,634

(634
)
14,702

123
Bank debt - -   - -
           
Common shares outstanding (000's)          
End of period 184,116 135,572   184,116 135,572
Weighted average - basic 184,108 135,360   173,997 135,387
Weighted average - diluted 185,530 136,945   175,412 136,971
           

(1) Cash flow from operations and cash flow from operations per share are Non-IFRS Measures. Refer to "Non-IFRS Measures" in Management's Discussion and Analysis.

2012 Outlook

Antrim's decision to divest of its oil and gas interests in Argentina will allow the Company to focus on high return opportunities in the UK North Sea. Antrim remains on track for first production of approximately 3,000 bopd net, from the Causeway Field in the third quarter of 2012, followed by the Fionn Field in 2013. 

Antrim continues to work with its joint venture partners for the development of the Fyne Field with the intention of achieving first production in 2014.

In 2012, Antrim will continue to take a leading role in the exploration of the Greater Fyne Area. A well will be drilled in the third quarter of 2012 to test the Cyclone prospect. In addition, Antrim will participate in the drilling of an exploration well in the Contender prospect in the Northern North Sea in the second quarter of 2012.

Antrim will continue studies on the blocks covered by the Frontier Licence Options awarded to the Company in the Irish 2011 Atlantic Margin Licensing Round. 

About Antrim:

Antrim Energy Inc. is an international oil and gas exploration and production company headquartered in Calgary, Alberta, Canada. Antrim's production and exploration operations are centered in the United Kingdom. Antrim is listed on the Toronto Stock Exchange (AEN) and on the London Stock Exchange's Alternative Investment Market (AEY). Visit www.antrimenergy.com for more information. 

Forward-Looking Statements

This news release and any documents incorporated by reference herein contain certain forward-looking statements and forward-looking information which are based on Antrim's internal reasonable expectations, estimates, projections, assumptions and beliefs as at the date of such statements or information. Forward-looking statements often, but not always, are identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "targeting", "forecast", "achieve" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements and information. Antrim believes that the expectations reflected in those forward-looking statements and information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information included in this news release and any documents incorporated by reference herein should not be unduly relied upon. Such forward-looking statements and information speak only as of the date of this news release or the particular document incorporated by reference herein and Antrim does not undertake any obligation to publicly update or revise any forward-looking statements or information, except as required by applicable laws.

In particular, this news release and any documents incorporated by reference herein, contain specific forward-looking statements and information pertaining to the quality of and future net revenues from Antrim's reserves of oil, natural gas liquids ("NGL") and natural gas production levels. This news release may also contain specific forward-looking statements and information pertaining to the proposed plan of arrangement with Crown Point Ventures Ltd., commodity prices, foreign currency exchange rates and interest rates, capital expenditure programs and other expenditures, supply and demand for oil, NGL's and natural gas, expectations regarding Antrim's ability to raise capital, to continually add to reserves through acquisitions and development, the schedules and timing of certain projects, Antrim's strategy for growth, Antrim's future operating and financial results, treatment under governmental and other regulatory regimes and tax, environmental and other laws and the startup of production from the Causeway or Fyne Fields in the UK North Sea.

With respect to forward-looking statements contained in this news release and any documents incorporated by reference herein, Antrim has made assumptions regarding Antrim's ability to obtain additional drilling rigs and other equipment in a timely manner, obtain regulatory approvals, future oil and natural gas production levels from Antrim's properties and the price obtained from the sales of such production, the level of future capital expenditure required to exploit and develop reserves, the ability of Antrim's partners to meet their commitments as they relate to the Company and Antrim's reliance on industry partners for the development of some of its properties. Antrim's ability to obtain financing on acceptable terms, the general stability of the economic and political environment in which Antrim operates and the future of oil and natural gas pricing. In respect to these assumptions, the reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.

Antrim's actual results could differ materially from those anticipated in these forward-looking statements and information as a result of assumptions proving inaccurate and of both known and unknown risks, including risks associated with the exploration for and development of oil and natural gas reserves such as the risk that drilling operations may not be successful, operational risks and liabilities that are not covered by insurance, volatility in market prices for oil, NGLs and natural gas, changes or fluctuations in oil, NGLs and natural gas production levels, changes in foreign currency exchange rates and interest rates, the ability of Antrim to fund its substantial capital requirements and operations, risk associated with the proposed plan of arrangement with Crown Point Ventures Ltd., including the risk that the transaction is not completed or is completed on different terms than those described herein, or the risk that certain rights of first refusal are exercised, and Antrim's reliance on industry partners for the development of some of its properties, risks associated with ensuring title to the Company's properties, liabilities and unexpected events inherent in oil and gas operations, including geological, technical, drilling and processing problems, the accuracy of oil and gas reserve estimates and estimated production levels as they are affected by the Antrim's exploration and development drilling and estimated decline rates, in particular the future production rates at the Causeway, Fionn and Fyne Fields in the UK North Sea and at the Tierra del Fuego and Cerro de Los Leones concessions in Argentina, which are considered in discontinued operations. Additional risks include the ability to effectively compete for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel, incorrect assessments of the value of acquisitions, Antrim's success at acquisition, exploitation and development of reserves, changes in general economic, market and business conditions in Canada, North America, Argentina, South America, the United Kingdom, Europe and worldwide, actions by governmental or regulatory authorities including changes in income tax laws or changes in tax laws, royalty rates and incentive programs relating to the oil and gas industry and more specifically, changes to the capped market price in Argentina, changes in environmental or other legislation applicable to Antrim's operations, and Antrim's ability to comply with current and future environmental and other laws, adverse regulatory rulings, order and decisions and risks associated with the nature of the Common Shares.

Many of these risk factors, other specific risks, uncertainties and material assumptions are discussed in further detail throughout the news release and in Antrim's management discussion and analysis for the year ended December 31, 2011. Readers are specifically referred to the risk factors described in this news release under "Risk Factors" and in other documents Antrim files from time to time with securities regulatory authorities. Copies of these documents are available without charge from Antrim or electronically on the internet on Antrim's SEDAR profile atwww.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

Oil and Gas Disclosure

The calculation of barrels of oil equivalent ("boe") is based on a conversion rate of six thousand cubic feet of natural gas ("mcf") to one barrel of crude oil ("bbl"). Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All estimates of reserves contained herein are derived from two reports of McDaniel & Associates Consultants Ltd., the Company's independent reserves evaluators, with effective dates of December 31, 2011 and December 31, 2010. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.

Qualified Person Review

In accordance with AIM guidelines, Mr. Kerry Fulton, P. Eng and Vice President, Operations for Antrim, is the qualified person that has reviewed the technical information contained in this news release. Mr. Fulton has over 30 years operating experience in the upstream oil and gas industry.


FOR FURTHER INFORMATION PLEASE CONTACT:

Antrim Energy Inc. 
Stephen Greer 
President & CEO 
(403) 264-5111 
(403) 264-5113 (FAX) 
greer@antrimenergy.com 
or 
Antrim Energy Inc. 
Douglas B. Olson 
Chief Financial Officer 
(403) 264-5111 
(403) 264-5113 (FAX) 
olson@antrimenergy.com 
or 
Antrim Energy Inc. 
Scott Berry 
Manager, Investor Relations 
(403) 264-5111 
(403) 264-5113 (FAX) 
berry@antrimenergy.com 
or 
Martin Eales (NOMAD) 
RBC Capital Markets 
Managing Director, European ECM & Corporate Banking 
+44 (0) 20 7029 7881 
+44 (0) 20 7332 0316 (FAX)