August 29, 2017, Vancouver, Canada – Renaissance Oil Corp. (“Renaissance” or the “Company”) (TSX-V:ROE) reports its second quarter 2017 (“Q2 2017”) results. All dollar figures are Canadian dollars, unless otherwise noted.
- Crude oil production increased by 3% and natural gas production decreased by 10% in Q2 2017 compared with the previous quarter;
- Revenues were $5,372,763 in Q2 2017 compared with $5,531,569 in the previous quarter, resulting from general decreases in crude oil and natural gas prices in Mexico and fluctuations in natural gas production;
- Operating costs of $2.88 per boe were consistent in Q2 2017 with the previous quarter, and declined by 35% from $4.33 per boe, in the fourth quarter of 2016; and
- In Q2 2017, Renaissance completed the final closing of a brokered private placement of equity for gross proceeds of approximately $12.8 million.
|Three Months Ended||% change|
|Jun 30, 2017||Mar 31, 2017||Jun 30, 2016||Q2/17 v. Q1/17|
|Crude oil (Bbl/d)||633||616||782||(19%)|
|Natural gas (Mcf/d)||5,512||6,098||5,788||(5%)|
|Crude oil ($/Bbl)||55.20||57.08||58.91||(6%)|
|Natural gas ($/Mcf)||4.28||4.31||3.48||23%|
|Net income (loss)||(1,414,780)||87,309||(1,287,717)||(10%)|
|Per share, basic & diluted||(0.00)||0.00||(0.01)||–|
|Funds flow from operations||(139,301)||177,418||(208,287)||33%|
|Per share, basic & diluted||(0.00)||0.00||(0.00)||–|
*Production commenced May 10, 2016
Renaissance has made significant progress in the preparation of its initial drilling program in Mexico through the evaluation of drilling locations, applications for permits and the procurement of key oil field services and materials. The commencement of drilling, expected in Q4 2017, will be an inflection point in the Company’s strategic directive of being a leading petroleum operator in Mexico.
Renaissance, through Lumex Operación, the operations subsidiary for the Integrated Exploration and Production Contract of the Amatitlán block, has contracted Weatherford de Mexico S. de R.L. de C.V., a subsidiary of Weatherford International, an international drilling company, for the committed drilling program on the Amatitlán block. The first of six wells, targeting the shallow Chicontepec formation is expected to spud in early Q4 2017, pending government permitting. The Chicontepec is a prolific producing zone in the area and is actively being developed in the block adjacent to the Amatitlán block to the north. The Company is aggressively working to obtain the permit to spud a deeper unconventional well on Amatitlán targeting the Upper Jurassic shale formations in Q4 2017. Renaissance plans to drill an initial vertical hole to evaluate the entire Upper Jurassic section, followed by a horizontal well within a specifically targeted Upper Jurassic interval and complete the well with hydraulic fracturing. Based on proprietary geochemical evaluation, Renaissance believes the Upper Jurassic section throughout the Amatitlán block is a high potential reservoir. If the first well is successful, the 60,000 acre block has the potential for an aggressive unconventional development program. Renaissance has taken the lead role in operations and holds options to increase its interest in Amatitlán to 62.5% of current partner’s interest, upon successful development of the property.
Where it is currently producing over 1,500 boe/d, Renaissance will begin the committed drilling programs in the Mundo Nuevo, Topén and Malva blocks in the state of Chiapas (the “Chiapas Blocks”) in Q4 2017. The Appraisal and Development Plans for the Chiapas Blocks were approved by the Comisión Nacional de Hidrocarburos in April 2017, and consist of a drilling program of up to four new wells and a series of workover operations to existing wells, over the next 9 months. The planned operations at the Chiapas Blocks include a lower risk drilling program with potential to substantially increase the Company’s production base in Mexico. Incremental production from the Chiapas Blocks will be transported to market through the existing pipeline infrastructure, which has substantial underutilized capacity.
The reduced operating costs realized in Q1 2017 were continued in the most recent period, resulting in strong operating netbacks from the Chiapas Blocks. Renaissance continues to pursue cost saving initiatives to maintain the low operating cost structure in the three blocks.
Despite turbulent financial markets and decreasing global oil price, we were delighted to have successfully completed the equity financing in April 2017, for gross proceeds of $12.8 million. These funds and the support of our solid operational partners have positioned Renaissance with strong financial foundation to fund its upcoming capital expenditure plans.
Renaissance is pleased to announce Raúl Carrillo has joined as Country Manager to manage its Mexico City office and coordinate relations with government and industry. Mr. Carrillo has 15 years of international oil and gas experience working in Mexico with Halliburton and with the shale exploration drilling and completion group of Pemex. His career has covered more than 19 countries worldwide, he has established strong relationships within the energy industry, government regulators and Pemex. Mr. Carrillo, has expertise in unconventional oil and gas resource exploration and development, project planning, negotiation and execution. He holds a Bachelor’s Degree in Chemical Engineering from the Mexican National Polytechnic Institute and he has completed management training at the Texas A&M Mays School of Business.
The Company welcomes John Smyth as Project Manager in its Mexico City office. Mr. Smyth has 33 years of international oil and gas experience, with UNOCAL and Halliburton, covering more than 15 countries throughout North and South America, Asia, Europe and Africa. His expertise includes unconventional oil and gas resource exploration and development, project planning and execution, mature field optimization and upstream E&P project equity investment evaluations. Mr. Smyth resides in Mexico City, is fluent in Spanish and holds a Bachelor’s Degree in Geology and a Master’s Degree in Geophysics.
Renaissance continues to make progress on its journey to become a major Mexican energy producer.
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This news release should be read in conjunction with the Company’s financial statements for the quarter ending March 31, 2017 and related management’s discussion and analysis. These filings are available for review on SEDAR at www.sedar.com.