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Press Release
Press Release

Candax Energy Inc. Announces Second Quarter Financial & Operating Results

August 07, 2015 | About:

TORONTO, ONTARIO--(Marketwired - Aug 7, 2015) - Candax Energy Inc. ("Candax" or the "Company") (TSX:CAX), a company focused on mature oil field development in Tunisia, today announced financial and operating results for the quarter ended June 30, 2015. The unaudited financial statements, notes and MD&A pertaining to the period are available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and by visiting www.candax.com. All monetary figures reported herein are U.S. dollars unless otherwise stated.

Selected Operational & Financial Highlights

  • Average production, net of royalties, for the quarter ended June 30, 2015 was 404 bopd compared to 483 bopd for the same period last year. The decrease was mainly a result of a maintenance campaign on Ezzaouia Jurassic wells using a pulling unit;
  • Revenue for the three month period ended June 30, 2015 was $nil million compared to $8.2l million for the same period last year. As there were no sales, the quantity of oil in inventory has increased by 32.4 kbbs, equivalent to $1.9 million;
  • The Company reported a loss for the quarter ended June 30, 2015 of $4.1 million compared to a loss of $0.5 million for the same period last year. The difference relies on operating losses due to the fall of oil price and the costs associated to Ezzaouia operations including the perforation of Ezzaouia 11. The Company has also recognized an impairment loss of $2.2 million on El Bibane field;
  • As at June 30, 2015, Candax held cash and cash equivalents of $2.2 million;
  • As at June 30, 2015, Candax had loans and borrowings of $38.8 million with a current-portion of $7.1 million including $3.5 million of senior debt due to Geofinance NV waived until August 10, 2015;

"The financial loss of the second quarter of 2015 is disappointing but some of the non-recurrent additional costs are balanced by the success of the perforating operations on Ezzaouia 11," said Pierre-Henri Boutant, CFO of Candax.

Going Concern

During the six-month period ended June 30, 2015, the Company had a net loss of $7.9 million, negative cash flow from its operations of $3.3 million, and negative working capital of $0.3 million considering 7.1 million of current portion of loans and borrowings. As at June 30, 2015, the cash balance of $2.2 million, the trade and other receivables of $1.0 million and the crude oil inventory position does not cover the current liabilities of the Company.

The Company's operating loss for the first half of the year 2015 is mainly explained by the low quantity of oil sold at a low average price of $48 per barrel. The loss was also exacerbated by the heavy cost of renting a heated storage barge during the first quarter of the year to compensate the unavailability of the oil storage tank, and the associated curtailment of the production program.

In order to revert to profitability Candax needs to reposition itself in a context of weaker oil price not recovering as fast as anticipated by implementing a cut back on new investments. The management best case scenario has been revised accordingly with lower Brent price assumptions and downsize investments resulting in an impairment of $2.2 million.

Management has prepared projected cash flow information for a period of 12 months ending June 30, 2016. Revenue has been assessed based on capacity for the 2 upcoming liftings of 140,000 barrels respectively scheduled in September 2015 and March 2016. The Brent crude price assumptions retained for 2015 and 2016 are $55/bbl and $60/bbl respectively. On this basis, the revenue from the Company's production is estimated to be $8.3 million resulting in a cash inflow provided by its operations of $1.0 million. The cash generated will only cover minimum needs for maintenance requirements.

Due to lifting periodicity, the Company will face during this 12 months period 2 cash shortfalls in September/October of 2015 and February/March 2016. During these periods of time the needs in working capital may vary from $0.5 million to $1.5 million. Management is working on short term bank facilities options to bridge this gap.

The projected cash flows of the Company do not include the principal repayment of its contractual obligation to its major shareholder to service its debt of $3.5 million overdue and $3.5 million additional to be paid in January 2016.

The Company's forecast is also highly sensitive to Brent crude price volatility, and to the Company's production programs. A 10% change in one of these business assumptions would have a financial impact of $0.8 million on cash flows over the 12-month-period.

These uncertainties cast significant doubt upon the Company's ability to continue as a going concern.

To address its financing obligations, the Company has actively worked on strategic and financial alternatives and relied on the support of its major shareholder in obtaining successive waiver extension for its debt repayment.

Considering the lack of strategic alternatives, the Board of Directors and the Management of the Company are mainly considering Going Private options.

Review of Key Operations

Candax has 100% ownership of El Bibane, 100% ownership of Robbana and 45% ownership of Ezzaouia, on which Candax has partnered with ETAP, the Tunisian state oil and Gas Company. El Bibane and Robbana are operated from Tunis by Ecumed, a 100% subsidiary of Candax. Ezzaouia is operated from Tunis by Maretap, a 50/50 joint venture between ETAP and Ecumed.


During the second quarter, production from the Ezzaouia asset decreased to 162 bopd (net) from 232 bopd (net) during the same period last year. This was a result of the late restart on EZZ-1 and 9 production.

Maretap has completed a maintenance campaign on its EZZ-1 and EZZ-9 beam-pump activated wells using a pulling unit. In the meantime, performed a work over on EZZ-11 well, perforated a new producing layer then and resumed production with beam-pump in June 2015.

El Bibane

The condensate to gas ratio (CGR) was observed on average at 25 bbls/mmscf in the fourth quarter 2014 and, as expected, has decreased to circa 13 bbls/mmscf in the second quarter of 2015 due to the seasonal temperature effect. It is to be noted also that the water cut is averaging to 35% by the end of June as opposed to 10% in June 2014.


This press release includes "forward looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of Management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward looking statements.

Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to, risks associated with the oil and gas industry (including operational risks in exploration development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses; the uncertainty surrounding the ability of Candax Energy Inc. to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the ability of Candax Energy Inc. to fund the capital and operating expenses necessary to achieve the business objectives of Candax Energy Inc., the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by Candax Energy Inc. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of Candax Energy Inc. should not place undue reliance on these forward-looking statements. Statements in relation to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

About Candax

Candax is an international energy company with offices in Toronto and Tunis. The Candax group is engaged in exploration and the production of oil and gas in Tunisia and holds a royalty interest in an exploration permit in Madagascar.


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