Energia
Maha Energy AB: FILING OF SECOND QUARTER REPORT
Press release
Stockholm
29 August 2018
Maha Energy AB (publ) ("Maha" or the "Company") is pleased to announce its second quarter results. The report is attached to this press release and available on the Company's website at www.mahaenergy.ca.
Dear Friends and Fellow Shareholders of Maha Energy AB,
It is noteworthy Maha's acquisition of the Tie and Tartaruga producing oil fields in Brazil is well timed with the ongoing recovery and stabilization of world oil markets. Globally:
" " writes the International Energy Agency (IEA) in the World Energy Investment Report for 2018 that was released in July, 2018. The report goes on:
"
."
(See Table in PDF version attached)
The report shows that after the recent downturn, capital investment in the upstream oil and gas sector bottomed out in 2016. In 2017 there was a slight (2%) increase in capital spending - but annual spending is still 40% less than what it was in 2014. At the peak in 2014, annual capital expenditures in the oil and gas sector were almost USD 800 billion. In 2017, capital spending was USD 440 billion, up modestly from USD 425 billion in 2016.
It is 4 years since world oil price fell from USD 110/bbl to a low of USD 26/bbl. The evidence would suggest it is now safe to assume that the sector has stabilized; Oil prices are up and stable; capital investment has stabilized; the US rig count is stable. Demand, on the other hand, continues its' relentless upward march with the world poised to breach a 100 million barrel/day of consumption this year notwithstanding efforts towards electric vehicles and efficiencies. Demand has increased, on average, about 1.5% per year since 1980. Rising consumption, the shift away from investment in long-term projects and the USD 1 reduction in upstream investments from 2015-2017 raises serious questions about the industry's ability to adequately supply the world's future oil & gas requirements. The threat of new sanctions on Russia and Iran will also, in all likelihood, affect supply.
These observations should be cause for concern. I encourage everyone to read the report - it is full of interesting analysis and facts, including the rise of Electric Vehicles (EV's) and the corresponding massive demand for mobility as China, India and Africa continue to modernize their economies.
That said I remain bullish on the oil price and I think Maha's timing is near perfect. The work in Brazil will increase production just as price fully recovers. There is a lot going on, the most exciting of which are Maha's two announced drilling projects in Brazil.
The first - the 107D sidetrack will be the first horizontal well drilled at . It should spud any day. The Penedo sandstone target is an excellent candidate for this type of technology. The aim is to drill a 500 meter horizontal production hole into a zone that has produced over 650,000 barrels of oil with hardly any water. We are confident the outcome will be oil - drilling will tell how much.
The second - a vertical production well (the Attic Well) is planned to be drilled on the crest of the structure. The structure is a 3-way fault bounded structure that extends across multiple reservoirs. Both the Agua Grande and the Sergi reservoirs are known to be oil bearing and the structurally high well location is expected to access previously unproduced oil and gas from both reservoirs. Both zones are expected to be free flowing and will not initially require artificial lift. The Attic well is now anticipated to be spudded in October. The Attic Well will also explore the previously undrilled Boipeba structure, which could contain oil.
Financially, the second quarter was healthy for Maha despite the planned production shutdowns at the Tartaruga field. Higher oil prices and more production at the Tie field contributed to good consistent results for Maha.
Operationally, while work at did run into some problems because the work over unit hired was too small to pull an (unexpected) stuck existing completion string, the plan is to move the contracted drilling rig across the Tartaruga license area to the 7TTG well to finish the recompletion after the 107D sidetrack is finished.
At the there is excellent response to the water flood project started in October last year. The Agua Grande zone remains free flowing with very little water and the gas oil rate has returned to normal. While the Sergi zone has started to experience some water influx which could lead to an accelerated decline, the introduction of the newly purchased (and delivered) jet pump at GTE4 will increase production from both zones and prevent the decline in the Sergi zone.
We thank you for your continued support.
"Jonas Lindvall"
Managing Director
World Energy Investment 2018, International Energy Agency (IEA) 17 July, 2018. (https://webstore.iea.org/world-energy-investment-2018)
FNCA Sweden AB is the Company's Certified Adviser.
Jonas Lindvall (CEO)
Tel: +1 403 454 7560
Email: jonas@mahaenergy.ca
or
Ron Panchuk (CCO)
Tel: +1 403 454 7560
Email: ron@mahaenergy.ca
or
Andres Modarelli (CFO)
Tel: +1-403-454-7560
Email: andres@mahaenergy.ca
This information is published in accordance with the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact persons set out above on August 29, 2018, at 7:00 am CET.
Maha Energy AB is a Swedish public limited liability company. FNCA Sweden AB has been engaged as Certified Adviser. The Company's auditors are Deloitte. The Company's predecessor Maha Energy Inc. was founded in 2013 in Calgary, Canada, by Jonas Lindvall and Ron Panchuk. In May 2016, the new group was formed with Maha Energy AB as parent company for purposes completing an initial public offering on the Nasdaq First North Sweden stock exchange. Jonas Lindvall, CEO and Managing Director, has 26 years of international experience in the oil and gas industry, starting his career with Lundin Oil during the early days of E&P growth. After 6 years at Shell and Talisman, Jonas joined, and helped secure the success of, Tethys Oil AB. Maha's strategy is to target and develop underperforming hydrocarbon assets on global basis. The Company operates three oil fields, Tartaruga and Tie in Brazil and LAK Ranch, in Wyoming, U.S. For more information, please visit our website www.mahaenergy.ca.
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