SHAMARAN Q1 2012 FINANCIAL AND OPERATING RESULTS

ShaMaran Petroleum Corp 

21.05.2012 08:00
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May 18, 2012 - ShaMaran Petroleum Corp. ('ShaMaran' or the 'Company') (TSX
VENTURE: SNM) (NASDAQ OMX: SNM) is pleased to announce its financial and
operating results for the three months ended March 31, 2012. 



Highlights

  -- The Appraisal Work Program and Budget on the Atrush Block has been approved
     by the KRG. The Program consists of 3D seismic and a number of appraisal
     wells and studies.
  -- 3D seismic acquisition on the Atrush Block is in progress and on schedule
     to be completed by the end of June 2012. Preparations for the Atrush-2
     appraisal well are near complete and well spud is expected by end of May
     2012. Planning for an Early Well Test facility and a third appraisal well
     is also underway.
  -- Location construction and contracting is on schedule for a June 2012 spud
     of the Taza-1 exploration well. The Romfor-101 drilling rig has been
     contracted to drill the well. The well is targeting the proven regional
     Tertiary reservoirs of the Miocene Jeribe formation which is confirmed as
     oil-bearing and highly productive at the on trend Sarqala-1 well, the
     Miocene Euphrates formation and the Oligocene Kirkuk Group.
  -- The Company signed final binding agreements with the KRG in January 2012 to
     relinquish the 60% working interests previously held in each of the Arbat
     and Pulkhana Production Sharing Contracts ('PSCs').  An amount of $25
     million was paid in January 2012 to the KRG as relinquishment fees and the
     agreements relieve the Company of any further obligations under these PSCs.
     Disappointing testing results from the Pulkhana 9 well led the Company to
     this decision.
  -- In February 2012 the Company received a Detailed Property Report ('the
     Report') from its independent qualified resources evaluator, McDaniel &
     Associates Consultants Ltd. The Report is as at December 31, 2011 and
     includes 124,782 Mboe as best estimate of Gross Estimated Contingent
     Resources and 87,910 Mboe as the unrisked best estimate of Gross Estimated
     Prospective Resources net to ShaMaran for the Company's two assets. These
     estimates are exclusive of amounts relating to the Pulkhana and Arbat
     Blocks which were relinquished in January 2012.
  -- On April 2, 2012 the Company secured short term financing of $10 million
     from two related parties.
  -- The Company reported a net loss of $26.1 million for the quarter ended
     March 31, 2012 (2011: $0.5 million net income). The cash balance of the
     Company was $5.7 million as at March 31, 2012 (December 31, 2011: $49.1
     million).



Financial and Operating Results for the three months ended March 31, 2012

(Unaudited: Expressed in thousands of United States Dollars)



During the three months ended March 31, 2012 the Company continued its
exploration campaign in respect of the Taza and Atrush Block petroleum
properties in Kurdistan constituting the continuing operations of the Company.
These properties currently generate no revenues. The net loss in the quarter
was driven by one-time relinquishment fees totaling $25 million which were
relating to the relinquishment of the Pulkhana and Arbat Block PSCs paid to the
KRG in January 2012. 



Condensed Interim Consolidated Statement of Comprehensive Income

(Unaudited: Expressed in thousands of United States Dollars)

                                                    Three months ended March 31,
                                                                  2012      2011
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Expenses from continuing operations                                             
General and administrative expenses                              (384)     (164)
Share based payments recovery / (expense)                            2      (59)
Depreciation and amortisation expense                             (49)      (52)
Relinquishment costs                                          (25,732)         -
Impairment losses                                                (248)         -
Share of loss of associate                                        (66)      (79)
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Operating loss                                                (26,477)     (354)
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Finance costs                                                        -     (227)
Finance income                                                     391     1,162
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Net finance income                                                 391       935
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                                                                       ---------
Income / (loss) before income tax expense                     (26,086)       581
Income tax expense                                                (24)      (41)
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Net income / (loss) from continuing operations                (26,110)       540
Discontinued operations                                                         
Loss from discontinued operations                                 (37)      (78)
Net income / (loss) for the period                            (26,147)       462
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Other comprehensive income:                                                     
Currency translation differences                                    33        36
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Total other comprehensive income                                    33        36
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Total comprehensive income / (loss) for the period            (26,114)       498
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Condensed Interim Consolidated Balance Sheet

(Unaudited: Expressed in thousands of United States Dollars)

                                                     March 31,  December 31,
                                                          2012          2011
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Assets                                                                      
Non-current assets                                                          
Intangible assets                                       48,262        45,836
Property, plant and equipment                              210           382
Investment in associate                                 51,769        51,835
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                                                       100,241        98,053
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Current assets                                                              
Other current assets                                       377           647
Inventories                                              1,713         3,328
Other receivables                                        1,347           105
Cash and cash equivalents                                5,670        49,085
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                                                         9,107        53,165
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Assets associated with discontinued operations              12            21
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Total assets                                           109,360       151,239
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Liabilities                                                                 
Current liabilities                                                         
Accounts payable and accrued expenses                    7,673        23,245
Current tax liabilities                                    120           122
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                                                         7,793        23,367
Liabilities associated with discontinued operations      2,424         2,613
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Total liabilities                                       10,217        25,980
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Equity                                                                      
Share capital                                          533,349       533,349
Share based payments reserve                             3,826         3,828
Cumulative translation adjustment                           15          (18)
Accumulated deficit                                  (438,047)     (411,900)
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Total equity                                            99,143       125,259
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Total liabilities and equity                           109,360       151,239
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The cash position of the Company decreased by $43.4 million during first
quarter of 2012.  The main reasons for the decrease in the cash position was
the payment to the KRG of $25 million in relinquishment fees and the outflow of
funds to decrease accounts payable and accrued expenses by$15.6 million. In
addition the Company spend $2.4 on its continuing exploration activities in
Kurdistan. The Company received $10 million in short term financing subsequent
to the reporting period on April 2, 2012 and has a number of additional
financing possibilities which will be pursued as required. The Company is
confident that it will obtain the resources sufficient to satisfy its
contractual obligations and commitments under the agreed budgets. 



Condensed Interim Consolidated Cash Flow Statement

(Unaudited: Expressed in thousands of United States Dollars)

                                                              Three months ended
                                                                       March 31,
                                                                   2012     2011
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Operating activities                                                            
Net income / (loss) for the period from continuing             (26,110)      540
 operations                                                                     
Adjustments for:                                                                
Interest income                                                    (24)    (109)
Foreign exchange gain                                             (367)  (1,053)
Depreciation and amortisation expense                                49       52
Income tax                                                          (2)       43
Impairment losses                                                   248        -
Share-based payment recovery / (expense)                            (2)       59
Share of loss of associates                                          66       79
Capitalized expenses                                                  -    (191)
Changes in trade and other receivables                          (1,242)     (18)
Changes in other current assets                                     270    (269)
Changes in inventories                                            1,302    (863)
Changes in accounts payable and accrued expenses               (15,572)    2,280
Cash used in discontinued operations                              (217)    (188)
Net cash inflows / (outflows) from operating activities        (41,601)      362
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Investing activities                                                            
Intangible assets                                               (2,432)  (5,003)
Property, plant and equipment                                       194     (37)
Investment in associate                                               -  (4,000)
Interest received on cash deposits                                   24      109
Net cash outflows to investing activities                       (2,214)  (8,931)
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Financing activities                                                            
Proceeds net of costs on issuance of shares                           -       56
Net cash inflows from financing activities                            -       56
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Effect of exchange rate changes on cash and cash                    400    1,089
 equivalents                                                                    
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Change in cash and cash equivalents                            (43,415)  (7,424)
Cash and cash equivalents, beginning of the period               49,085   58,684
Cash and cash equivalents, end of the period                      5,670   51,260
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Outlook

The outlook for the year 2012 for the two blocks which the Company holds
interests in Kurdistan is as follows: 



Atrush Block

The operating company (GEP) had completed half of the planned initial 275
square kilometers for the 3D seismic acquisition program by the end of December
2011 (Phase 1) when operations were suspended because of winter weather.
Subsequently planned 3D coverage has been expanded to cover a total of 310
square kilometers. Operations to acquire the balance portion of the 3D Seismic
(Phase Two) recommenced during the first quarter 2012 and are on schedule to be
completed by the end of second quarter 2012. Preparations for the Atrush-2 are
near complete. The rig contract was awarded to DQE International and the well
spud is expected before the end of May 2012. Atrush-2 is estimated to take 65
days and has a planned total depth of 1,750m. The well is situated
approximately 3.5 km east of the Atrush-1 well and is planned as an appraisal
of the Jurassic oil discovery. 

The processed Phase One 3D seismic will be used to select a drilling location
for Atrush-3. Tendering is also in progress for an Early Well Test facility
(EWT) that is planned to be commissioned before the end of the year 2012. GEP
also plans to re-enter and recomplete the Atrush-1 well for production so that
it can be connected to the EWT along with Atrush-2. The complete processed 3D
seismic from both phases will be used to select drilling candidates for the
2013 drilling campaign. 



Taza Block

Preparations for drilling the first Taza exploration well continued during the
first quarter. The surface location for the well was approved and civil
engineering works for site access and well site are under way.  Work is on
schedule for the planned commencement of drilling operations before the end of
June 2012. The Taza-1 well is estimated to take 102 days, has a planned total
depth of 3,250m and is targeting proven regionally productive Tertiary
reservoirs of the Jeribe, Euphrates & Kirkuk Group. 



New Ventures

As part of its normal business the Company continues to evaluate new
opportunities in the region. 



About ShaMaran

ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration
vehicle. It has two projects in the region: the Atrush Block and Taza Block
(formerly K42) exploration blocks. These projects are nearby and on trend with
existing fields and recent discoveries. 

Kurdistan lies within the northern extension of the Zagros Folded Belt. The
area is highly underexplored and is currently undergoing a significant
exploration and development campaign by over 40 mid to large size international
oil companies. 

ShaMaran Petroleum 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'. 




Forward-Looking Statements

This press release contains statements 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. 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. 



On behalf of the Board,



Pradeep Kabra,

President and CEO



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. 



ShaMaran Petroleum's Certified Advisor on NASDAQ OMX First North is Pareto
Öhman AB. 





FOR FURTHER INFORMATION PLEASE CONTACT:

ShaMaran Petroleum Corp.
Keith Hill
Chairman
(604) 806-3583
khill@namdo.com


or

ShaMaran Petroleum Corp.
Pradeep Kabra
President and CEO
0041 22 560 8605
pradeep.kabra@shamaranpetroleum.com


or

ShaMaran Petroleum Corp.
Sophia Shane
Corporate Development
(604) 689-7842
(604) 689-4250 (FAX)
sophias@namdo.com
www.shamaranpetroleum.com
News Source: NASDAQ OMX



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Language:     English
Company:      ShaMaran Petroleum Corp
              
               
              Canada
Phone:        
Fax:          
E-mail:       
Internet:     
ISIN:         CA8193201024
WKN:          
 
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