Oryx Petroleum First Quarter 2017 Financial and Operational Results

CALGARY, May 10, 2017

CALGARY, May 10, 2017 /CNW/ - Oryx Petroleum Corporation Limited ("Oryx Petroleum" or the "Corporation") today announces its financial and operational results for the three months ended March 31, 2017. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.

Q1 2017 Financial Highlights:

• Total revenues of $7.9 million on working interest sales of 169,800 barrels of oil ("bbl") and an average realised sales price of $41.92/bbl for Q1 2017
• The Corporation has received full payment in accordance with production sharing contract  entitlements for all oil sale deliveries into the Kurdistan Export Pipeline during Q1 2017
• Operating expenses of $4.2 million ($25.02/bbl) and an Oryx Petroleum Netback ¹ of $0.10/bbl
• First full quarter with operations at both the Demir Dagh and Zey Gawra fields in the Hawler license area
• 62% decrease in operating expenses in per barrel terms versus Q1 2016
• General and administrative expenses of $2.6 million
• Unchanged versus Q1 2016 but includes approximately $0.9 million of technical support expenses that would have been classified as capital expenditures in prior periods
• Net profit of $4.1 million ($0.02 per common share) in Q1 2017 as a result of certain non-recurring items versus net loss of $19.4 million ($0.13 per common share) in Q1 2016
• Net cash generated by operating activities of $2.2 million in Q1 2017 versus Net cash used in operating activities of $7.8 million in Q1 2016. Q1 2017 result consists of negative Operating Cash Flow² of $2.4 million and a $4.5 million decrease in non-cash working capital
• Net cash used in investing activities was $3.4 million including payments related to drilling preparation and facilities work in Q1 2017 in the Hawler license area and the finance lease obligation related to the Hawler production facilities, partially offset by an increase in trade payables
• $39.6 million of cash and cash equivalents as of March 31, 2017

Operations Update:

• Average gross (100%) oil production of 2,900 bbl/d in Q1 2017
• Average gross (100%) oil production of 2,900 bbl/d in April 2017
• Completed acquisition of 1,921 km² of 3D seismic data in the AGC Central license area and fast-track processing, with full processing and interpretation ongoing
• Drilling of the ZAB-1 sidetrack well targeting the Cretaceous reservoir at the Zey Gawra field to commence in the coming weeks

___________________________
1	Oryx Petroleum Netback is a non-IFRS measure. See the table below for a definition of and other information related to the term. ARIVA.DE Börsen-Geflüster Kurse Forza Petroleum -   0,00%
2	Operating Cash Flow is a non-IFRS measure. See the table below for a definition of and other information related to the term.

2017 Forecasted Work Program and Capital Expenditures:

• 2017 capital expenditure forecast of $47 million. Most expenditures will be dedicated to the Hawler license area in the Kurdistan Region of Iraq with a focus on the appraisal of the Zey Gawra field. Forecast activities consist of:
• Four wells to be spudded at the Zey Gawra field in 2017 with associated field infrastructure
• Recompletion of the Demir Dagh-8 well targeting the Cretaceous reservoir
• Full settlement of finance lease obligation related to the Hawler production facilities
• Processing of recently acquired 3D seismic data covering a portion of the AGC Central license area

Restructuring of Obligations:

• The Addax and Oryx Group ("AOG") and the Corporation have agreed to amend the Loan Agreement dated March 11, 2015 (the "Loan Agreement" and the "Loan Amendment") to (i) extend the maturity date from March 10, 2018 to July 1, 2019, and (ii) require that, after May 11, 2017, accrued interest be paid out in common shares of the Corporation ("Common Shares") approximately every six months, rather than in cash upon maturity, at the then current five day volume-weighted average trading price for the Common Shares.
• As at March 31, 2017 the total balance of principal and accrued interest owed under the Loan Agreement was $98.8 million
• The Loan Amendment is subject to the acceptance of the Toronto Stock Exchange and approval of minority shareholders. The Loan Amendment will be submitted to the shareholders of the Corporation for consideration at the scheduled Annual Meeting of Shareholders to be held on June 7, 2017.
• Negotiations with the vendor of the Hawler license area with regards to restructuring the contingent consideration obligation are in very advanced stages and an agreement is expected in the coming days
• As at March 31, 2017 the total balance of principal and accrued interest potentially owed under the contingent consideration obligation was $75.9 million
• An agreement to settle the financial lease obligation related to the Hawler production facilities was reached in Q1 2017 whereby the lessor was paid $8.9 million ($7.6 million net to the Corporation) in April 2017 to settle the liability in full. The Corporation`s share of payments due under the obligation through to its latest possible termination date in September 2018 were previously calculated to total $17.5 million. 
• On March 15, 2017 the Corporation issued 15.5 million Common Shares to a contractor to settle a $4.8 million trade payable.

Proposed Equity Subscriptions:

• AOG and Zeg Oil and Gas have agreed to subscribe for a total of 161,850,057 Common Shares for aggregate consideration of $54.1 million (the "Shareholder Subscriptions")
• AOG has subscribed for 131,933,226 common shares at $0.33426 per common share (the "AOG Subscription"), resulting in an aggregate subscription price of $44.1 million, $20 million of which is payable at closing in cash and the balance of which will be paid through the extinguishment of $24.1 million of principal and accrued interest owing under the Loan Agreement; and
• Zeg Oil and Gas has subscribed for 29,916,831 Common Shares at $0.33426 per common share (the "Zeg Oil and Gas Subscription"), resulting in an aggregate subscription price of $10 million payable at closing in cash.
• Completion of the AOG Subscription and the Zeg Oil and Gas Subscription is subject to acceptance of the Toronto Stock Exchange, approval of shareholders (excluding AOG and Zeg Oil and Gas and their related parties), restructuring of the contingent consideration obligation on terms satisfactory to AOG and Zeg Oil and Gas, and other customary conditions. The AOG Subscription and the Zeg Oil and Gas Subscription will be submitted to the shareholders of the Corporation for consideration at the scheduled Annual Meeting of Shareholders to be held on June 7, 2017.

Liquidity Outlook:

• The Corporation expects cash on hand as of March 31, 2017, expected proceeds from the anticipated Shareholder Subscriptions, and cash receipts from net revenues will allow it to fund its forecasted cash expenditures and operating and administrative costs and to meet its obligations through the first half of 2018. Capital expenditures to achieve further production growth beyond the first half of 2018 will likely require access to additional funding.   Without the proceeds from the anticipated Shareholder Subscriptions, Oryx Petroleum would be unlikely to be able to continue development of the Hawler license area and the Corporation would be required to consider divestiture or relinquishment of the license area.

CEO's Comment

Commenting today, Oryx Petroleum's Chief Executive Officer, Vance Querio, stated:

"During Q1 2017 we maintained fairly stable production and sales. Gross (100%) oil production averaged 2,900 bbl/d in Q1 2017 with all production sold via the export pipeline and payments for export sales through the end of March received in full.

The acquisition of approximately 2,000 km² of 3D seismic data covering the AGC license area was completed in January 2017. Fast-track processing has also been completed with full processing and interpretation ongoing and expected to be completed later this year.

Our capital program for 2017 and early 2018 is focused primarily on the Zey Gawra field in the Hawler license area. The program includes four further wells at the Zey Gawra field and the recompletion of the Demir Dagh-8 well. We expect to commence drilling of the first new well at Zey Gawra in the coming weeks and we expect this program will provide us with additional  production and cash flow by early 2018 sufficient to sustain our operations and allow us to meet our obligations.

We are making significant progress on restructuring our obligations and finalizing our balance sheet recapitalization. During Q1 2017, we reached agreement with AOG with regards to proposed amendments to the balance of the credit facility owed them, we agreed to settle the financial lease obligation related to the Hawler production facilities for significantly less than the expected payments over the remaining life of the lease, we satisfied a significant trade payable with the issuance of common shares, and we are very close to an agreement to restructure the contingent consideration obligation with the vendor of the Hawler license. Importantly, AOG and Zeg Oil and Gas have executed equity subscription agreements to subscribe for Oryx Petroleum shares in consideration for cash and debt extinguishment. The agreed equity subscriptions by AOG and Zeg Oil and Gas are conditioned upon acceptance by the Toronto Stock Exchange, minority shareholder approval, and the restructuring of the contingent consideration obligation related to the acquisition of the Hawler license area on terms acceptable to AOG and Zeg Oil and Gas. The amendment to the terms of the credit facility provided by AOG is also conditioned on acceptance of the Toronto Stock Exchange and approval of minority shareholders. The restructuring of our obligations and the equity subscriptions, if closed, will provide us with the liquidity and financial flexibility needed to execute our capital program.

We look forward to finalising our balance sheet recapitalization and implementing our 2017 plans for continued appraisal, development and exploration of our core assets."

Selected Financial Results

Financial results are prepared in accordance with International Financial Reporting Standards ("IFRS") and the reporting currency is US dollars. References in this news release to the "Group" refer to Oryx Petroleum and its subsidiaries. The following table summarises selected financial highlights for Oryx Petroleum for the three month periods ended March 31, 2017 and March 31, 2016 as well as the year ended December 31, 2016.

	Three Months Ended March 31		Year Ended December 31
($ in millions unless otherwise indicated)	2017	2016	2016
Revenue	7.9	1.2	22.8
Working Interest Oil Production (bbl)	171,200	44,900	588,000
Average WI Oil Production per day (bbl/d)	1,900	500	1,600
Working Interest Oil Sales (bbl)	169,800	53,300	593,300
Average Sales Price ($/bbl)	41.92	20.25	34.61
Operating Expense	4.2	3.5	12.6
Field production costs ($/bbl)(1)	19.13	50.11	16.28
Field Netback ($/bbl)(2)	1.34	(40.21)	0.63
Operating expenses ($/bbl)	25.02	65.53	21.28
Oryx Petroleum Netback ($/bbl)(3)	0.10	(53.40)	(0.54)
Net Profit (Loss)	4.1	(19.4)	(65.7)
Earnings (Loss) per Share ($/sh)	0.02	(0.13)	(0.31)
Operating Cash Flow(4)	(2.4)	(5.7)	(9.2)
Net Cash generated by (used in) operating activities	2.2	(7.8)	(11.5)
Net Cash used in investing activities	3.4	7.9	34.7
Capital Expenditure(5)	(5.9)	4.3	36.3
Cash and Cash Equivalents	39.6	71.6	40.7
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