HOUSTON, Aug. 6, 2012 /PRNewswire/ -- CAMAC Energy Inc. (NYSE MKT: CAK) ("the Company") today provided an operational update and announced its second quarter 2012 results.
Africa ‒ New Production Sharing Contracts signed in Kenya and Gambia
In May 2012, the Company signed four production sharing contracts ("PSCs") with the Government of the Republic of Kenya, covering previously awarded onshore exploration Blocks L1B and L16, and two new offshore deep water exploration Blocks L27 and L28. The Company will be the operator with 100% interest in the blocks. The Government of Kenya will be entitled to participate up to 20% in any area subsequent to a commercial discovery.The PSCs for deep water offshore Blocks L27 and L28 each provide for an initial exploration period of three years with a minimum work program requiring the carrying out of regional geological and geophysical studies, reprocessing and re-interpreting previous 2D seismic data, and acquiring, processing and interpreting 1,500 square kilometers of 3D seismic data. The Company has the right to apply for up to two additional exploration periods requiring the drilling of one well in each such additional two year period. The PSCs for the onshore Blocks L16 and L1B each provide for an initial exploration period of two years with a minimum work program requiring the acquisition and interpretation of gravity, magnetic, and 500 kilometers of 2D seismic data. The Company has the right to apply for up to two additional exploration periods requiring the drilling of one well in each such additional two year period. Also in May 2012, the Company signed two Petroleum Exploration, Development and Production Licenses with The Republic of The Gambia for previously awarded offshore exploration blocks A2 and A5. The Company will be the operator with 100% interest in both Blocks. Gambia National Petroleum Company will have the right to participate up to 15% following approval of an exploration and development plan. The Licenses for both blocks provide for an initial exploration period of four years, during which the Company will, for each Block, be responsible for a regional geologic survey, acquiring, processing, and interpreting 750 square kilometers of 3D seismic data, and drilling one exploration well. The Company has the right to apply for up to two additional exploration periods requiring the drilling of one well in each such additional two year period. Nigeria ‒ Oyo Field On June 29, 2012, Allied Energy PLC ("Allied"), an affiliate of the Company's largest shareholder completed the previously announced transaction to acquire the 40% working interest in Nigerian OMLs 120 and 121 owned by Nigerian Agip Exploration ("NAE"), a subsidiary of Eni SpA. As a result, Allied is now the operator of the Oyo Field, and is expected to engage CAMAC Energy to act as its technical service provider. Allied has informed the Company that it plans to drill well #7 in the Oyo Field in the fourth quarter of 2012 with the dual objective of increasing production and testing the resource potential in the deeper Miocene formation. Average daily production from the Oyo Field in Nigeria was 2,786 bopd during the second quarter of 2012, and 4,109 bopd during the second quarter of 2011. CAMAC Energy's share of average daily net production at the Oyo Field, excluding royalty, was 441 bopd for the quarter ended June 30, 2012, and 1,215 bopd for the quarter ended June 30, 2011. China On August 6, 2012, the Company completed the previously announced sale of its interest in the Zijinshan Gas Block in China to Leyshon Resources Limited (AIM/ASX: LRL) ("Leyshon"), a natural resources mining company based in Beijing. Under the agreed terms, CAMAC Energy divested its wholly-owned Hong Kong subsidiary Pacific Asia Petroleum Limited (PAPL) for a cash consideration of $2.5 million and 10 million fully paid ordinary shares in Leyshon. The Company expects to invest both the proceeds and savings from its China operations into its African exploration projects. "I am very pleased with the progress we have made in the first half of this year," commented Dr. Kase Lawal, Chairman and Chief Executive Officer. "We have successfully repositioned CAMAC Energy as an exploration company focused on the continent of Africa. With the six new exploration blocks in Kenya and Gambia, we will be a participant in two of the most exciting exploration provinces in the world. We are already working to gather data that will allow us to identify prospects for drilling on the new blocks and attract partners, while keeping an eye on exploration wells scheduled to be drilled on neighboring blocks in coming months. At the same time, we will benefit further from our relationship with Allied as we jointly work to increase production from the Oyo Field and to test the promising Miocene formation below." Operating Results CAMAC Energy announced a net loss of $4.0 million, or $(0.03) per diluted share, for the quarter ended June 30, 2012. For the same period in 2011, CAMAC Energy reported net income of $5.7 million, or $0.04 per diluted share. The Company's net loss during the second quarter of 2012 was primarily a result of having no oil lifting from the Oyo Field during the quarter. There was no lifting and therefore no operating revenue from the Oyo Field in the second quarter of 2012. Operating revenues for the second quarter of 2011 were $20.0 million, based on an average oil price of approximately $113 per barrel received for the lifting from the Oyo Field during the quarter. General and administrative expenses were $3.2 million for the second quarter of 2012, compared to $4.2 million for the second quarter of 2011. The decrease in 2012 was mainly due to lower salary and benefit expense related to officer resignations in the prior period. Cash and cash equivalents at June 30, 2012, were $3.4 million compared to $8.5 million at March 31, 2012. The decrease in cash and cash equivalents was principally due to cash payments made for normal operations and expenditures related to six new exploration licenses in Kenya and Gambia. Conference Call Details A conference call for investors will be held on Wednesday, August 8, 2012 at 10:00 a.m. Central Time ( 11:00 a.m. Eastern Time) to discuss CAMAC Energy's operations and second quarter results with a focus on the Company's strategy for the future. Hosting the call will be Earl W. McNiel, Interim Chief Financial Officer. The call can be accessed live over the telephone by dialing:
- (877) 317-6789 for callers in the United States;
- (866) 605-3852 for callers in Canada;
- +(412) 317-6789 for international callers.