Atrush Block: World-Class Oil Project

ShaMaran is a Canadian oil and gas company listed on the TSX Venture Exchange and the NASDAQ First North Growth Market (Sweden) under the symbol “SNM.” The Company has a 27.6% ownership interest in Atrush Block, a high‐quality oil field in Kurdistan that has a large production base with significant growth potential. As a Lundin Group Company, ShaMaran can leverage the expertise and strength of a group that has been building resource companies around the world for more than 40 years.

2020 was a challenging year, due to the global coronavirus pandemic (“COVID‐19”) and the collapse of crude oil prices. Despite the turmoil Atrush has continued to meet production targets while reducing lifting costs and has also been able to sustain replaced produced volumes in the Atrush block despite the significantly reduced 2020 development program.  The Company also during the year successfully completed measures that resolved the liquidity shortfall and strengthened the Company’s financial position enabling it to meet its bond interest obligations.

2020 Operational Highlights

  • 2020 oil production increase of 39% (2020 vs 2019);
  • Cumulative production of 40 million barrels achieved on January 4, 2021 despite a significantly reduced 2020 development program due to the global pandemic and the first quarter 2020 collapse of crude oil prices;
  • Average production of approximately 40,800 barrels of oil per day (“bopd”) for the fourth quarter of 2020; lower than the year’s average due deferral of capital development wells, and operational interventions aggregated in this quarter;
  • Full year 2020 average production of approximately 45,100 bopd in line with 2020 guidance;
  • Full year 2020 lifting costs per barrel of $5.08 in line with 2020 guidance and a 31% decrease vs. 2019 lifting costs;
  • Full year 2020 capital expenditure of $34 million ($9.4 million net to ShaMaran) in line with the capex program as revised in April 2020 in response to the global pandemic and collapse of oil prices;
  • Progression of Atrush subsurface de‐risking continued in 2020 with latest revisions of static and dynamic modelling resulting in joint venture alignment to progress an Atrush “integrated oil column” development approach;
  • Atrush Property gross 2P reserves2 increased to 109.9 MMbbls as at December 31, 2020 from 108.5 in 2019 being a 108% reserves replacement and Company’s gross 2P reserves from 29.9 MMbbls to 30.3 MMbbls;

The Atrush Block is located in the Kurdistan Region of Iraq, approximately 85 kilometres northwest of Erbil, the capital of Kurdistan. The Atrush Block is 269 square kilometres in area and has oil proven in Jurassic fractured carbonates in the Chiya Khere structure. Total discovered oil in place in the Atrush Block is a low estimate of 1.6 billion barrels, a best estimate of 2.0 billion barrels and a high estimate of 2.6 billion barrels.  Atrush is continuously being appraised and further phases of development, including further drilling and possible facilities expansion, will be defined based on production data, appraisal information and economics.

2021 Guidance

With improving oil prices in 2021 we anticipate a continuation of strong operating cash flow that will be supported with prudent capital deployment in the coming year.

  • Atrush field gross average daily production is expected to range from 39,000 barrels of oil per day (“bopd”) to 44,000 bopd. Resumption of deferred drilling and completion spending in 2021 is expected to generate quarter-on-quarter production growth;
  • The Atrush capital expenditures for 2021 are planned at US$53.2 million (US$14.7 million net to ShaMaran), pending final approval by the Ministry of Natural Resources of the Kurdistan Regional Government of Iraq (“KRG”). The Atrush 2021 capital program includes drilling and completion of a production well with targeted offtake rates of over 4,000 bopd and initiation of the gas solution project which will significantly reduce emissions and operating costs from reliance on diesel use;
  • The Atrush operating expenditure is forecast to be US$80 million (US$22 million net to ShaMaran) for 2021, in line with 2020 actual operating costs;
  • Atrush average lifting costs per barrel are estimated to range from US$4.70 to US$5.70. Atrush lifting costs are mainly fixed costs and dollar-per-barrel estimates should decrease with increasing levels of production and operational efficiencies;
  • Payments from the KRG for oil delivered in 2021 are expected to continue to be made one month after production. Recovery of the US$41.7 million receivable owed to the Company by the KRG for November 2019 to February 2020 entitlements has started as per the KRG’s December 2020 proposed repayment mechanism of sharing equally the incremental revenue if Brent prices exceed US$50 per barrel in any month;
  • ShaMaran will continue to implement prudent management of its cashflow in 2021 with an annual corporate budget of US$5.6 million, a 30% reduction in spending over 2020; and
  • Following the amendment of the ShaMaran bond terms in January 2021 the Company intends to use its free cash flow to buy its bonds should commercially attractive rates be available in the market and as a result will be reducing its debt burden over the coming year and will update the market of such activity on a quarterly basis.

Atrush Owership Interest

Atrush Owership Interest

Simplified Atrush Production Sharing Agreement

Simplified Atrush Production Sharing Agreement Learn More

Production

Monthly Production

Monthly Production

Quarterly Production Data

Quarterly PeriodTotal Field Production (bbl)Average Daily Production (bpd)Average NetbackAverage Lifting Cost
Q3 20171.3 million14,600$36.88$8.54
Q4 20172.0 million21,700$47.00$8.09
Q1 20182.1 million23,600$51.14$6.06
Q2 20181.44 million15,800$58.88$7.97
Q3 20182.0 million21,700$59.72$7.92
Q4 20182.52 million27,400$52.58$7.84
Q1 20192.37 million26,300$47.76$8.89
Q2 20192.58 million28,300$53.06$9.28
Q3 20193.06 million33,167$46.43$7.62
Q4 20193.83 million41,700$47.92$5.32
Q1 20204.25 million46,700$35.21$5.90
Q2 20204.27 million46,900$13.87$5.36
Q3 20204.24 million46,100$27.26$3.97
Q4 20203.75 million40,800$28.27$5.10

 

Strong Cash Flow

In Million USDQ4.2020Q3.2020Q2.2020Q1.2020Q4.2019
Operating cash, net of G&A and other cash expenses3.39.0(1.5)7.315.6
Net gain on Atrush acquisition0.00.00.00.00.0
Receivable/payable and working capital adjustments2.1(4.5)2.6(5.5)(13.8)
     Cash in from operations5.34.41.11.81.8
KRG loans, interest and KRG carry receivables collected2.62.61.82.12.3
Purchase of additional interest in Atrush 10.00.00.00.00.0
Atrush Development(1.9)(1.5)(2.0)(3.5)(8.6)
     Cash (out on) / in from investments0.71.1(0.2)(1.3)(6.3)
Bonds repaid0.00.00.00.0(0.0)
Bond coupon interst payments(0.0)(11.4)0.0(11.4)(0.0)
Nemesia Guarantee0.022.80.00.00.0
     Cash out on financing(0.0)11.40.0(11.4)0.0
Total change in cash6.016.90.9(10.9)(4.5)
Opening cash22.45.54.615.520.0
     Ending cash28.422.45.54.615.5

The Atrush Block is a high-quality oil field that has a large production base with significant growth potential.

The Atrush Block is located approximately 85 kilometers northwest of Erbil, the capital of Kurdistan, is 269 square kilometers in area and has oil proven in Jurassic fractured carbonates in the Chiya Khere structure. The structure is expressed at surface by the Chiya Khere mountain which runs east‐west for approximately 25 kilometers with an approximate width of 3.5 kilometers.

30,000
bopd
2017 Startup Capacity
45,100 bopd
2020 Average Production
39,000 - 44,000 bopd
2021 Guidance
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