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Sea Dragon Tags 2Q Production of 6,803 BOE/d; Talks Financials

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Sea Dragon Energy Inc. announces its 2015 second Quarter Financial and Operating Results.

Second Quarter 2015

Operational Performance

• Production:
  • Total gross production for the quarter averaged 8,699 boepd (869 boepd net); of which oil was 7,253 boepd (725 boepd net) and gas and liquids 1,446 boepd (145 boepd net).
• NW Gemsa:
  • Average daily oil sales volumes for the quarter were 719 boepd;
  • Unitization discussions continue with the offset operator;
  • Plans in place for workover and drilling campaign to start in third quarter.
• South Disouq:
  • Evaluated the results of the South Disouq 3D seismic acquisition tender;
  • Finalizing contract review with a view to starting acquisition campaign in fourth quarter.
• South Ramadan:
  • Partners awarded seismic reprocessing contract, leading to a potential well being drilled in 2016;
  • Reprocessing commenced, with initial phase expected to take 6 months to complete.

Financial Performance

• Net Revenues
  • Realized Net Revenues of US$1 .8MM ( US$57.44 /boe) and a Netback of US$2 .1MM ( US$32.38 /boe);
• Netback
  • Netback increased 13% in US$ terms and 55% in US$/boe terms vs previous quarter despite lower production volumes as a result of higher oil prices in the quarter and a drop in Opex (thanks to a reversal of certain Shukheir Marine opex costs as part of the settlement following relinquishment);
• Working Capital
  • Working capital of US$5 .8MM, of which US$2 .8MM is current and US$3 .0MM of pledged receivables will remain non-current until the South Disouq 3D seismic work program is completed;
  • Exited the quarter with cash on hand of US$0 .5MM:
  • Collected US$1 .4MM in outstanding receivables, equivalent to 3 months;
  • Following the farmout of South Disouq, US$6 .0MM of bank guarantees were replaced by the farminee and cancelled, with the Company recovering US$6 .0MM of restricted cash and repaying US$6 .9MM of debt;
• Accounted for the Relinquishment of Shukheir Marine
  • Submitted a working capital settlement request to EGPC pursuant to concession relinquishment;
  • Recorded the settlement balance during the quarter which resulted in:
    • Operating income gain of US$0 .8MM;
    • Debtor adjustment of US$0 .1MM.

Subsequent to the Quarter

• Strategic Transaction
  • Press Released the announcement of a Strategic Business Combination between Sea Dragon and Madison PetroGas Ltd;
• Operations
  • Current gross production volumes for oil are 6,803/boepd and for gross gas and liquids 1,475/boepd. The Company's interest is 10%;
  • Held an Operating Committee Meeting (OCM) for the South Disouq concession. Partners approved the acquisition of 300km² of seismic based upon improved tender results;
• Financials
  • Made subsequent repayment towards debt facility, with current bank debt now standing at US$1 .75MM;
  • Collected US$1 .8MM in outstanding receivables.

Paul Welch , President & CEO of Sea Dragon commented: "This has been an active quarter, with preparation of significant work campaigns at NW Gemsa and South Disouq, recognition of settlement balances pursuant to the Shukheir Marine relinquishment, and reduction of debt pursuant to the South Disouq farmout. In parallel, the Company continued to pursue strategic opportunities and was able to reach an agreement on a business combination with Madison Petrogas that will ultimately solidify the business platform and working capital position of the Company and offer new organic growth opportunities upon completion. Against a difficult backdrop in the sector, the progress of the Company and business climate in Egypt continue to be positive and I look forward to reporting on our progress in subsequent periods."