Horn Petroleum Corporation ("Horn" or the "Company") (TSX VENTURE:HRN) is
pleased to announce its financial and operating results for the three months
ended March 31, 2014 and the appointment of James Phillips as President and CEO.
-- The Company is pleased to announce that James Phillips has been
appointed by the Board as President and CEO of Horn with immediate
effect. The current President and CEO, David Grellman, will continue his
role as VP Operations for Africa Oil Corp. ("Africa Oil") and will focus
on the ongoing Kenya exploration program. Jim has held several positions
with Africa Oil including Vice President of Exploration, Chief Operating
Officer, and was up until now, the Vice President of Business
Development for both Africa Oil and Horn. Before joining Africa Oil, Jim
was the Geneva-based Vice President Exploration for Africa and Middle
East for Lundin Petroleum AB ("Lundin Petroleum"). In this position, he
was instrumental in securing an exploration portfolio in Kenya,
Ethiopia, and Somalia, which would later become the foundation for
Africa Oil and Horn's current acreage holdings. Jim has been based in
East Africa (Addis Ababa, Ethiopia and Nairobi, Kenya) for the last 7
years and has amassed 30 years of experience in the oil and gas
exploration business. Of these 30 years of experience, ten years have
been directed towards East African business development and new venture
exploration. In addition to his previous experience with Lundin
Petroleum, Jim also had key positions at Shell Oil Company and
Occidental Petroleum Corporation ("Occidental Petroleum"). At Occidental
Petroleum, Jim's foreign assignments included key management roles in
Southeast Asia, South America, and Sub-Saharan Africa New Ventures, with
overseas postings in both Oman and Pakistan. Jim is a graduate of the
University of California, Berkeley and San Diego State University where
he obtained BS and MS degrees, both in Geology.
-- During the three months ended March 31, 2014, Horn increased its
investment in intangible exploration assets by $0.6 million. The
majority of the costs incurred during the first three months of 2014
related to Production Sharing Agreement ("PSA") related expenditures and
general and administrative costs.
-- The Company continues to assess the operating environment in each of the
Dharoor Valley and Nugaal Valley exploration areas from logistical,
community and security perspectives. These assessments will provide
critical information required to plan operations in the Company's
exploration areas.
-- The Company actively engages with a range of governments and
organizations, domestic and international to progress planned
exploration activities.
-- Efforts are focused on making preparations for a seismic acquisition
campaign in the Dharoor Valley area which will include a regional
seismic reconnaissance grid in the previously unexplored eastern portion
of the basin as well as prospect specific seismic to delineate a
drilling candidate in the western portion of the basin where an active
petroleum system was confirmed by the drilling of the Shabeel-1 and
Shabeel North-1 wells. The Company continues to pursue efforts to drill
an exploration well in the Nugaal Valley block and is working with the
Puntland government to move this project forward.
-- Horn continues to actively pursue new venture opportunities.
-- Horn continues to investigate potential joint venture partnerships for
its Dharoor Valley and Nugaal Valley exploration areas.
-- As at March 31, 2014, the Company had cash of $3.4 million and working
capital of $3.0 million as compared to cash of $3.6 million and working
capital of $4.0 million at December 31, 2013.
-- The Company's Board of Directors has approved the grant of 2,184,000
incentive stock options to certain directors, officers and other
eligible persons of the Company. The options will have a three year
term, vesting provisions consistent with the existing outstanding
options, and will have an exercise price that will be equal to the
closing trading price of the Company's shares on the TSX Venture
Exchange on Thursday, May 15, 2014.
Horn Executive Chairman Keith Hill commented, "We are very pleased to welcome
Jim as President and CEO of Horn. He brings a wealth of experience in new
ventures and was a key architect in developing the highly successful Africa Oil
portfolio. I would also like to thank David Grellman for his efforts and
contribution to Horn, in particular his key role in drilling two exploration
wells in Puntland safely and on budget in a very difficult operating
environment. I look forward to working together in the future with David on
Africa Oil projects."
First Quarter 2014 Financial and Operating Highlights
Consolidated Statement of Net Income (Loss) and Comprehensive Income (Loss)
(Thousands of United States Dollars)
(Unaudited)
Three months Three months
ended ended
March 31, 2014 March 31, 2013
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Operating expenses
Stock-based compensation $ 27 $ 130
Management fees 206 224
Office and general 43 45
Professional fees 73 16
Stock exchange and filing fees 12 16
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361 431
Finance expense 12 26
Finance income (1) (3,637)
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Net income (loss) and comprehensive income
(loss) attributable to common shareholders (372) 3,180
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Net income per share
Basic $ 0.00 $ 0.03
Diluted $ 0.00 $ 0.03
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Weighted average number of shares outstanding
for the purpose of calculating earnings per
share
Basic 96,849,316 96,849,316
Diluted 96,849,316 96,849,316
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Operating expenses decreased $0.1 million for the three months ended March 31,
2014 compared to the same period in 2013 due mainly to a reduction in
stock-based compensation expense. The reduction in stock-based compensation
expense is due a reduction in the remaining life of outstanding stock options.
Financial income and expense is made up of the following items:
(Thousands United States Dollars)
(Unaudited)
----------------------------------------------------------------------------
March 31, March 31,
2014 2013
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Fair market value adjustment - warrants $ 5 $ (3,633)
Interest and other income (1) (4)
Foreign exchange loss 7 26
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Finance Income $ (1) $ (3,637)
Finance expense $ 12 $ 26
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Consolidated Balance Sheets
(Thousands United States Dollars)
(Unaudited)
----------------------------------------------------------------------------
March 31, December 31,
2014 2013
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ASSETS
Current assets
Cash and cash equivalents $ 3,423 $ 3,581
Accounts receivable 94 666
Prepaid expenses 50 69
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3,567 4,316
Long-term assets
Intangible exploration assets 89,986 89,368
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89,986 89,368
Total assets $ 93,553 $ 93,684
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LIABILITIES AND EQUITY ATTRIBUTABLE TO COMMON
SHAREHOLDERS
Current liabilities
Accounts payable and accrued liabilities $ 396 $ 236
Due to related party 164 115
Current portion of warrants 6 1
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566 352
Total liabilities 566 352
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Equity attributable to common shareholders
Share capital 86,494 86,494
Contributed surplus 3,000 2,973
Retained earnings 3,493 3,865
----------------------------------------------------------------------------
Total equity attributable to common
shareholders 92,987 93,332
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Total liabilities and equity attributable to
common shareholders $ 93,553 $ 93,684
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The decrease in total assets from March 31, 2014 to December 31, 2013 is due to
the funding of cash-based operating expenses.
Consolidated Statement of Cash Flows
(Thousands United States Dollars)
(Unaudited)
----------------------------------------------------------------------------
Three months ended March 31, March 31,
2014 2013
----------------------------------------------------------------------------
Cash flows provided by (used in):
Operations:
Net income (loss) for the period $ (372) $ 3,180
Item not affecting cash:
Stock-based compensation 27 130
Fair market value adjustment - warrants 5 (3,633)
Unrealized foreign exchange loss 7 26
Changes in non-cash operating working
capital 48 20
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(285) (277)
Investing:
Intangible exploration expenditures (618) (1,313)
Changes in non-cash investing working
capital 703 (1,058)
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85 (2,371)
Financing:
Advances from related party 255 244
Payments to related party (206) (244)
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49 -
Effect of exchange rate changes on cash and
cash equivalents denominated in foreign
currency (7) (26)
----------------------------------------------------------------------------
Decrease in cash and cash equivalents (158) (2,674)
Cash and cash equivalents, beginning of the
period $ 3,581 $ 9,545
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Cash and cash equivalents, end of the period $ 3,423 $ 6,871
Supplementary information:
Interest paid Nil Nil
Taxes paid Nil Nil
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The decrease in cash in the three months ended March 31, 2014 is mainly the
result of intangible exploration expenditures and cash-based operating expenses.
Consolidated Statement of Equity
(Thousands United States Dollars)
(Unaudited)
----------------------------------------------------------------------------
March 31, March 31,
2014 2013
----------------------------------------------------------------------------
Share capital:
Balance, beginning of period $ 86,494 $ 86,494
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Balance, end of period 86,494 86,494
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Contributed surplus:
Balance, beginning of period $ 2,973 $ 2,521
Stock-based compensation 27 130
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Balance, end of period 3,000 2,651
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Earnings:
Balance, beginning of period $ 3,865 $ 1,660
Net income (loss) for the period (372) 3,180
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Balance, end of period 3,493 4,840
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Equity attributable to common shareholders $ 92,987 $ 93,985
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The Company's consolidated financial statements, notes to the financial
statements, management's discussion and analysis for the three months ended
March 31, 2014 and the 2013 Annual Information Form have been filed on SEDAR
(www.sedar.com) and are available on the Company's website
(www.hornpetroleum.com).
Outlook
Based on the encouragement provided by the Shabeel wells, the Company and its
partners entered the next exploration period in both the Dharoor Valley and
Nugaal Valley PSAs which carry a commitment to drill one well in each block
within an additional three year term ending October 2015. The current
operational plan is to contract a seismic crew to acquire additional data in the
Dharoor Valley block and to hold discussions with the Puntland Government
regarding advancement of drill ready prospects in the Nugaal Valley block. The
focus of the Dharoor Valley block seismic program will be to delineate new
structural prospects for the upcoming drilling campaign.
Horn has been in discussions with potential joint venture partners and is
actively pursuing new venture opportunities. Somalia is going through an
unprecedented period in its history with a real opportunity for all stakeholders
to assist in the rebuilding of the country. The first internationally recognized
Federal government took power in 2012 following over 20 years of transitional or
no government. In Puntland, a new President was voted into power in January 2014
and the transfer took place peacefully. The Company actively engages with a
range of governments and organizations, domestic and international, around how
Somalia can best develop a stable Federal state including the institutions and
systems it needs to properly manage its natural resources.
Horn holds a 60% working interest in the Dharoor and Nugaal Valley blocks and is
the operator. The other partners in the blocks are Range Resources (20%) and Red
Emperor (20%). Africa Oil Corp. holds an approximate 45% equity interest in
Horn.
Horn Petroleum Corporation is a Canadian oil and gas company with assets in
Puntland, Somalia. The Corporation holds a 60% interest and operatorship in the
Dharoor and Nugaal blocks encompassing a Jurassic Rift Basin on trend and
analogous to the large oil fields in Yemen. The Corporation's shares are listed
on the TSX Venture Exchange under the symbol "HRN".
FORWARD LOOKING INFORMATION
Certain statements made and information contained herein constitute
"forward-looking information" (within the meaning of applicable Canadian
securities legislation). Such statements and information (together, "forward
looking statements") relate to future events or the Company's future
performance, business prospects or opportunities. Forward-looking statements
include, but are not limited to, statements with respect to estimates of
reserves and or resources, future production levels, future capital expenditures
and their allocation to exploration and development activities, future drilling
and other exploration and development activities, ultimate recovery of reserves
or resources and dates by which certain areas will be explored, developed or
reach expected operating capacity, that are based on forecasts of future
results, estimates of amounts not yet determinable and assumptions of
management.
All statements other than statements of historical fact may be forward-looking
statements. Statements concerning proven and probable reserves and resource
estimates may also be deemed to constitute forward-looking statements and
reflect conclusions that are based on certain assumptions that the reserves and
resources can be economically exploited. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs, plans,
projections, objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as "seek", "anticipate", "plan",
"continue", "estimate", "expect, "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should", "believe" and
similar expressions) are not statements of historical fact and may be
"forward-looking statements". Forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such forward-looking
statements. The Company believes that the expectations reflected in those
forward-looking statements are reasonable, but no assurance can be given that
these expectations will prove to be correct and such forward-looking statements
should not be unduly relied upon. The Company does not intend, and does not
assume any obligation, to update these forward- looking statements, except as
required by applicable laws. These forward-looking statements involve risks and
uncertainties relating to, among other things, changes in oil prices, results of
exploration and development activities, uninsured risks, regulatory changes,
defects in title, availability of materials and equipment, timeliness of
government or other regulatory approvals, actual performance of facilities,
availability of financing on reasonable terms, availability of third party
service providers, equipment and processes relative to specifications and
expectations and unanticipated environmental impacts on operations. Actual
results may differ materially from those expressed or implied by such
forward-looking statements.
ON BEHALF OF THE BOARD
Keith Hill, Executive Chairman
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Horn Petroleum Corporation
Sophia Shane
Corporate Development
(604) 689-7842
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