/EINPresswire.com/ -- VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/16/16 -- ShaMaran Petroleum Corp. ("ShaMaran" or the "Company") (TSX VENTURE: SNM)(OMX: SNM) is pleased to announce its financial and operating results for the six months ended June 30, 2016. Unless otherwise stated all currency amounts indicated as "$" in this news release are expressed in thousands of United States dollars.

Following the announcement on May 19, 2016 regarding the changed scope of the 31 km long 12" and 36" feeder pipeline from the Atrush block boundary to a tie in point with the main Kurdistan export pipeline (the "Feeder Pipeline"), TAQA Atrush B.V. ("TAQA"), General Exploration Partners, Inc. ("GEP", a wholly owned subsidiary of ShaMaran) and Marathon Oil KDV BV, have been working very closely with the Kurdistan Regional Government ("KRG") and KAR Company ("KAR") regarding a contractual and commercial arrangement for the construction of the Feeder Pipeline.

Commercial and legal discussions are in an advanced state, but proved to be more complex than initially envisaged and have resulted in a delay in the start of construction of the Feeder Pipeline. This will most likely result in first oil to slip into Q1 2017.

Construction and commissioning of the 30,000 bopd Atrush Phase 1 Production Facility ("Production Facility") is nearing completion. Works are progressing on the 8.5 km section of pipeline being constructed between the Production Facility and block boundary (the "Spur Pipeline") up to the Feeder Pipeline. The Spur Pipeline is also being constructed by KAR.

The Atrush-4 production well has recently been completed and works are now in progress to complete Atrush-2, the final of four producing wells which will be available for production at startup.

Chris Bruijnzeels, President and CEO of ShaMaran, commented: "Construction of the Atrush production facilities is substantially complete. Following the change in scope for the Feeder Pipeline, all parties involved have been working diligently towards a common goal to get a contractual and commercial arrangement in place to allow construction of the Feeder Pipeline to commence. Unfortunately legal and commercial discussions proved to be more complex and have taken longer than initially envisaged, but are now close to being finalised."

FINANCIAL AND OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2016

During the reporting period the Company continued its appraisal and development campaign in respect of the Atrush petroleum property located in the Kurdistan Region of Iraq which constitutes the continuing operations of the Company. Atrush currently generates no revenues.

Financial Results

The Company reports a net loss of $5.3 million in the first half of 2016 which was primarily driven by general and administrative expenses, share based payments expense and finance cost, the substantial portion of which was expensed borrowing costs on the Company's Senior Bonds and Super Senior Bonds. These expenses have been slightly offset by interest income on interest bearing funds as well as service fees.

Condensed Interim Statement of Comprehensive Income

(Unaudited, expressed in thousands of United States Dollars)

                                           Three months          Six months
                                          ended June 30,      ended June 30,
                                          2016      2015      2016      2015
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Continuing Operations

Income
Service fees                                30         -        30         -
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Expenses
Depreciation and amortisation
 expense                                  (11)      (16)      (22)      (32)
Share based payments expense              (58)     (176)     (134)     (852)
General and administrative expense     (1,009)     (552)   (2,311)   (1,515)
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Loss before finance items and income
 tax expense                           (1,078)     (744)   (2,467)   (2,399)
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Finance income                              12        58        33       546
Finance cost                           (1,443)   (1,370)   (2,845)   (2,662)
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Net finance cost                       (1,431)   (1,312)   (2,812)   (2,116)
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Loss before income tax expense         (2,479)   (2,056)   (5,249)   (4,515)
Income tax expense                        (15)      (34)      (41)      (61)
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Loss from continuing operations        (2,494)   (2,090)   (5,290)   (4,576)
Discontinued operations
Net loss from discontinued
 operations                                  -       (4)         -      (14)
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Loss for the period                    (2,494)   (2,094)   (5,290)   (4,590)
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Other comprehensive income
Items that may be reclassified to
 profit or loss:Currency translation
 differences                                32        42        64        53
Actuarial loss on defined pension
 plan                                    (505)         -     (505)         -
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Total other comprehensive income         (473)        42     (441)        53
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Total comprehensive loss for the
 period                                (2,967)   (2,052)   (5,731)   (4,537)
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Condensed Interim Consolidated Balance Sheet

(Unaudited, expressed in thousands of United States Dollars)

                                                At June 30,  At December 31,
                                                       2016             2015
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Assets
Non-current assets
Property, plant and equipment                       201,285          177,044
Intangible assets                                    89,039           88,645
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                                                    290,324          265,689
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Current assets
Cash and cash equivalents, unrestricted              12,186           30,409
Cash and cash equivalents, restricted                16,407            1,512
Other current assets                                    243              200
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                                                     28,836           32,121
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Total assets                                        319,160          297,810
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Liabilities and equity
Current liabilities
Accounts payable and accrued expenses                 8,907            9,560
Accrued interest expense on bonds                     2,420            2,252
Current tax liabilities                                   8               31
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                                                     11,335           11,843
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Non-current liabilities
Borrowings                                          155,592          148,263
Provisions                                            9,687            8,080
Pension liability                                     2,207                -
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                                                    167,486          156,343
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Total liabilities                                   178,821          168,186
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Equity
Share capital                                       611,179          593,179
Share based payments reserve                          6,369            6,235
Cumulative translation adjustment                      (19)             (83)
Accumulated deficit                               (477,190)        (469,707)
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Total equity                                        140,339          129,624
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Total liabilities and equity                        319,160          297,810
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Total assets increased during the first half of 2016 by $21.3 million which corresponds to increases in share capital by $18 million, borrowings by $7.3 million and other non-current liabilities by $3.8 million which were offset by an increase in the accumulated deficit by $7.3 million, principally due to the net loss recorded in the period, and a decrease in current liabilities by $0.5 million.

Property, plant & equipment assets increased by $24.2 million during the first six months of 2016 was due to $17.9 million of Atrush development costs and capitalised borrowing costs of $6.3 million incurred during the period. The increase in intangible assets by $0.4 million during the first half of 2016 is due to $0.2 million of Atrush exploration costs and capitalised borrowing costs of $0.2 million incurred in the period.

Condensed Interim Consolidated Cash Flow Statement

(Unaudited, expressed in thousands of United States Dollars)

                                           Three months          Six months
                                          ended June 30,      ended June 30,
                                          2016      2015      2016      2015
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Operating activities
Net loss from continuing operations    (2,494)   (2,090)   (5,290)   (4,576)
Adjustments for:
  Interest expense on senior secured
   bonds - net                           1,393     1,307     2,728     2,643
  Share based payments expense              58       176       134       852
  Foreign exchange loss / (gain)            33        54        74     (425)
  Unwinding discount on
   decommissioning provision                17         -        43         -
  Pension expense                           14         -        14         -
  Depreciation and amortisation
   expense                                  11        16        22        32
  Interest income                         (12)      (58)      (33)     (121)
  Changes in provisions                      -     (191)         -     (267)
  Changes in current tax liabilities       (8)       (1)      (23)       (9)
  Changes in other current assets         (21)        61      (43)     1,351
  Changes in accounts payable and
   accrued expenses                    (3,049)   (2,797)     (653)   (5,277)
Cash used in discontinued operations         -         -         -       (8)
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Net cash outflows to operating
 activities                            (4,058)   (3,523)   (3,027)   (5,805)
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Investing activities
Purchases of intangible assets             363  (17,043)         2  (33,367)
Interest received on cash deposits          12        58        33       121
Purchase of property, plant and
 equipment                             (8,180)       (1)  (16,545)       (2)
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Net cash outflows to investing
 activities                            (7,805)  (16,986)  (16,510)  (33,248)
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Financing activities
Proceeds on bond issue                  17,000         -    17,000         -
Bond transaction costs                   (780)         -     (780)         -
Shares issued on Rights Offering             -         -         -    60,462
Transaction costs on Rights Offering         -         -         -   (1,351)
Interest payments to bondholders             -   (8,625)         -   (8,625)
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Net cash inflows from / (outflows
 to) financing activities               16,220   (8,625)    16,220    50,486
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Effect of exchange rate changes on
 cash and cash equivalents                   -      (15)      (11)       472
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Change in cash and cash equivalents      4,357  (29,149)   (3,328)    11,905
Cash and cash equivalents, beginning
 of the period                          24,236    98,258    31,921    57,204
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Cash and cash equivalents, end of
 the period(i)                          28,593    69,109    28,593    69,109
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The decrease by $3.3 million in the cash position of the Company during the first six months of 2016 was due to cash outflows of $16.5 million on Atrush Block development activities, $2.3 million of cash out on G&A and other cash expenses and $0.7 million of negative cash adjustments from changes in working capital items which were offset by $16.2 million of net proceeds on the issue of Super Senior Bonds.

Operating Results

Production Facility, Export Pipeline and Wells

--  Construction and commissioning of the 30,000 bopd Atrush Phase 1
    Production Facility is nearing completion.
--  Work on the Spur Pipeline being constructed between the Production
    Facility and the block boundary is progressing and is expected to be
    completed well before the finalisation of the Feeder Pipeline.
    Construction of the Feeder Pipeline is expected to start shortly. The
    Atrush partnership, has been working very closely with the KRG and KAR
    regarding a contractual and commercial arrangement for the construction
    of the Feeder Pipeline. Commercial and legal discussions are in an
    advanced state.
--  The completion for the Atrush-4 well has been installed and tested. Work
    on the Atrush-2 well completion, the final of four producers, has now
    commenced and is expected to be completed by end August 2016. All four
    producing wells are now connected to the Production Facility and will be
    ready for production prior to start-up.

Corporate

--  On February 15, 2016 the Company reported updates to estimated reserves
    and contingent resources for the Atrush block as of December 31, 2015.
    Total oil in place is estimated at 1.5 to 2.8 billion barrels, with
    Total Field Proven plus Probable ("2P") Reserves on a property gross
    basis increasing from 61.5 million barrels ("MMbbl") to 85.1 MMbbl, an
    increase of 38 percent. Total Field Unrisked Best Estimate Discovered
    Recoverable Resources ("2P + 2C")(1) on a property gross basis increased
    from 372 million barrels oil equivalent (MMboe)(2) to 389 MMboe.
--  The Company completed a financing arrangement in early May 2016 (the
    "Financing Arrangement") with holders of the $140.6 million bonds (the
    "Senior Bonds") of General Exploration Partners. Inc., a wholly owned
    subsidiary of ShaMaran. The Financing Arrangement provides the Company
    with additional liquidity in 2016 of approximately $33 million based on
    the issuance of $17 million ($16.2 million proceeds net of transaction
    costs) of additional super senior bonds ("Super Senior Bonds") and
    provides terms for the Company to pay bond coupon interest in kind by
    issuing additional bonds, including approximately $17.9 million of 2016
    coupon interest. Also under the Financing Arrangement the Company issued
    218,863,000 common shares at a deemed price of CAD 0.105 per share to
    holders of the Senior Bonds who elected to convert Senior Bonds into
    ShaMaran common shares which represented $18 million of Senior Bonds at
    face value.

(1) This estimate of remaining recoverable resources (unrisked) includes contingent resources that have not been adjusted for risk based on the chance of development. It is not an estimate of volumes that may be recovered.

(2) Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 million cubic feet ("Mcf") per one barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

ATRUSH OUTLOOK

Production Facility

The construction and commissioning of the 30,000 bopd Atrush Phase 1 Production Facility is substantially complete.

Engineering and design of water injection facilities is planned to commence in 2016 and to continue in 2017.

Oil Export Pipeline

TAQA, as operator of the Atrush PSC, is responsible for the construction of the Spur Pipeline to the block boundary. The construction of the Spur Pipeline is ongoing and is expected to be completed in Q3 2016. The Feeder Pipeline will be owned by the KRG and construction is expected to start shortly under an agreed contractual and commercial arrangement between the Atrush partnership, the KRG and KAR. Commercial and legal discussions are in an advanced state, but delays in the start of construction of the Feeder Pipeline will most likely result in first oil to slip into Q1 2017. Production start is expected once the Feeder Pipeline is commissioned.

Well

Installing the completion of the AT-2 well is expected to be completed by end August 2016. Four producing wells, all equipped with ESPs, will be available for production at start up. This will be followed by the drilling and completion of a dedicated water disposal well and the drilling of an appraisal and development well in 2017.

ABOUT SHAMARAN

ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration company with a 26.8% direct interest in the Atrush oil discovery until such time that the Kurdistan Regional Government has completed the exercise of its right to acquire up to a 25% interest. The Atrush Block is currently undergoing an appraisal and development campaign.

ShaMaran is a Canadian oil and gas company listed on the TSX Venture Exchange and the NASDAQ OMX First North Exchange (Stockholm) under the symbol "SNM". Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. Pareto Securities AB is the Company's Certified Advisor on NASDAQ OMX First North.

The Company's condensed interim consolidated financial statements, notes to the financial statements and management's discussion and analysis have been filed on SEDAR (www.sedar.com) and are also available on the Company's website (www.shamaranpetroleum.com).

FORWARD LOOKING STATEMENTS

This news release contains statements and information about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as legal and political risk, civil unrest, general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events and management's capacity to execute and implement its future plans. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking information. Forward-looking information typically contains statements with words such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "projects", "potential", "scheduled", "forecast", "outlook", "budget" or the negative of those terms or similar words suggesting future outcomes. The Company cautions readers regarding the reliance placed by them on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company.

Actual results may differ materially from those projected by management. Further, any forward-looking information is made only as of a certain date and the Company undertakes no obligation to update any forward-looking information or statements to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events, except as may be required by applicable securities laws. New factors emerge from time to time, and it is not possible for management of the Company to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information.

Contacts:
Chris Bruijnzeels
President and CEO
ShaMaran Petroleum Corp.
+41 22 560 8605
chris.bruijnzeels@shamaranpetroleum.com

Sophia Shane
Corporate Development
ShaMaran Petroleum Corp.
+1 604 689 7842
sophias@namdo.com
www.shamaranpetroleum.com

Robert Eriksson
Investor Relations, Sweden
ShaMaran Petroleum Corp.
+46 701 112615
reriksson@rive6.ch