Niko Resources Ltd. ("Niko" or the "Company") (TSX:NKO) is pleased to report its
operating and financial results for the quarter and year ended March 31, 2014.
The operating results are effective June 26, 2014. All amounts are in US dollars
unless otherwise indicated and all amounts are reported using International
Financial Reporting Standards unless otherwise indicated.
BOARD OF DIRECTORS MESSAGE TO THE SHAREHOLDERS
In the second quarter of fiscal 2014, the Company adopted a new business
strategy that incorporates the following principles:
-- Focus on value generation in the D6 Block;
-- Reduce the Company's exposure to future drilling commitments in its
exploration portfolio while, if possible, maintaining optionality to
benefit from the exploration potential in the portfolio; and
-- Continue to restructure the Company to create the necessary financial
strength and flexibility to realize the inherent value of the Company's
assets.
In the third quarter of fiscal 2014, the Company closed on its $340 million debt
facility while simultaneously raising approximately $30 million (net) in equity.
Through this financing, the Company rebalanced its debt obligations, extended
the majority of its debt maturities out to calendar 2017, finalized a settlement
agreement for its long term drilling contracts, and added $174 million in cash
to the Company's balance sheet, thus providing funding and time for execution of
the Company's new strategic focus.
In addition, over the past year, the Company implemented the following:
-- Suspension of exploration activities outside of India - Exploration
efforts ceased in Indonesia, Trinidad, Madagascar, and Brazil, with
drilling and technical staffing reduced significantly. Activities in
these countries are now focussed on farm-outs and/or sales of working
interests along with extensions of drilling obligations or modifications
of terms. In addition, the Company initiated discussions with its
vendors in Indonesia and Trinidad towards settlement of the payables
accrued from its drilling programs.
-- Expansion of the Board of Directors - Four new independent directors
joined the board, bringing expertise and in-depth experience in
corporate turnarounds and rebuilding, and the Board formed a special
Restructuring Committee to directly oversee the Company's restructuring
efforts.
-- Changes in management - New executive talent joined the Company with
practical experience in financial restructuring and the Company hired an
"in-house" general counsel. The Company also retained specialized
consultants to advise on the many technical aspects of corporate
restructuring. More recently, the Board has retained a search firm to
identify candidates for a new Chief Executive Officer who is to provide
the leadership to complete the Company's restructuring and develop the
strategic roadmap for future value growth of the Company.
In the first quarter of fiscal 2015, the Company sold its interest in the Block
5(c) asset, providing funds to repay $15 million of its settlement obligation
for its drilling contracts and $20 million of the short-term Facility E portion
of the term loan, and adding an additional $26 million in cash to the balance
sheet.
The Company is now dealing with the decisions of the Government of India ("GOI")
to defer, first in March and now in June, the notification of the natural gas
price calculated from the pricing formula in the Domestic Natural Gas
Guidelines, 2014 ("Guidelines") that the GOI had notified earlier in the year.
In the opinion of the contractor group of the D6 Block, the GOI has contravened
the terms of the D6 production sharing contract ("PSC") and as a result, the
contractor group filed an arbitration notice against the GOI seeking
implementation of the Guidelines in accordance with the terms and conditions of
the PSC. The D6 contractor group will endeavour to work with the GOI to achieve
a prompt and efficient resolution to this dispute.
On behalf of the Board of Directors, I would like to thank the people of Niko
for their diligent efforts during this year and our shareholders for their
continued support as we all move forward into the future.
Wendell R. Robinson - Chairman of the Board, Niko Resources Ltd.
BUSINESS HIGHLIGHTS
The significant business highlights of fiscal 2014 are as follows:
Sales Volumes
----------------------------------------------------------------------------
(MMcfe/d) Quarter ended Quarter ended Year ended Year ended
Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2014 Mar. 31, 2013
----------------------------------------------------------------------------
D6 Block, India 50 47 51 96
Block 9,
Bangladesh 67 62 59 56
Other(1) 2 2 2 6
----------------------------------------------------------------------------
Total(2) 119 112 112 158
----------------------------------------------------------------------------
(1) Other includes Hazira in India, and Canada.
(2) Figures may not add up due to rounding.
D6 Block, India
-- New pricing formula for domestic gas sales in India approved by the GOI,
to be effective from April 1, 2014. Notification of the price has been
deferred by the GOI until October 1, 2014, and in May 2014, the
contractor group for D6 Block issued a notice of arbitration to the GOI
seeking implementation of the approved pricing formula.
-- Significant oil and gas discovery made at MJ field in the D6 Block,
adding to the resource potential in the block. The drilling of MJ-A1
appraisal well, located in the western fault block on the field, was
completed in January 2014 and technical evaluation suggested a gross pay
interval of 130 meters and pre-drill expectations were largely
confirmed. The drilling of MJ-A2 appraisal, located to target the
eastern fault block on the field, was completed in June 2014 and
encountered high quality Mesozoic synrift reservoir, similar to the
quality and age of the hydrocarbon bearing sections found in MJ-1 and
MJ-A1, but the targeted section was wet. The implication of the MJ-A2
well is a reduction of the estimated areal extent of the field from 65
square kilometers to 38 to 45 square kilometers, approximately 3.5 to 4
times the areal extent of the analogous MA field. The results of the two
appraisal wells are being integrated into the plans for further
appraisal drilling and subsequent options for development. The MJ field
remains a material discovery for the D6 Block partners and is well
positioned to take advantage of the existing D6 Block infrastructure.
Niko and its partners are accelerating the commercial assessment of this
significant discovery.
-- Plan for R-Cluster development project in the D6 Block approved by the
GOI, providing the opportunity for significant production growth for the
Company in the future. The final decision to proceed with the project is
pending resolution of the gas pricing issue noted above.
-- MA-8 development well brought on-stream in the fourth quarter of the
year, increasing production from the D6 Block for the first time in
nearly four years. MA-6H sidetrack commenced drilling in the fourth
quarter and was brought on-stream in the first quarter of fiscal 2015.
-- Production optimization efforts for existing fields in the D6 Block
underway with i) workover campaigns on existing shut-in wells, and ii)
engineering and construction activities for booster compression, with
targeted completion by the fourth quarter of fiscal 2015. The initial
two workovers in the Dhirubhai 1 and 3 fields did not succeed due to
mechanical well bore difficulties, and the third workover operation is
currently underway.
Block 9, Bangladesh
-- Workovers completed on two wells in the Bangora field, resulting in a
sustained production level of approximately 66 Mmcfe/d since mid-year.
-- Engineering and construction activities for plant compression ongoing,
with targeted completion in the first quarter of fiscal 2015.
Legal Proceedings
-- Decision issued by an tribunal constituted under the Rules of the
International Centre for Settlement of Investment Disputes ("ICSID")
respecting its jurisdiction to decide two arbitration claims related to
the Company's Feni and Chattak assets in Bangladesh. The arbitration
processes on both claims have commenced with a hearing occurring in
April 2014 on the claim for the amounts owed to the Company for gas
supplied from the Feni field. A decision from the arbitral panel on this
claim is expected in the second quarter of fiscal 2015.
Restructuring
-- Term loan facilities agreement entered into, repaying certain of the
Company's debt obligations outstanding at the time and providing
significant capacity for the Company's planned capital program, focused
primarily on developing and appraising the fields in the D6 Block in
India.
-- Settlement agreement executed with Diamond Offshore related to drilling
contracts in Indonesia and Trinidad.
-- Exploration efforts in Indonesia and Trinidad suspended in the second
quarter of the year, with the Company's focus shifting to working with
the various governments and partners to maximize the optionality of its
exploration portfolio, while working to strengthen its balance sheet.
-- Combined net proceeds of $58 million received in the year related to
farm-outs and other arrangements, with the sale of the Company's
interest in Block 5(c) in Trinidad contributing an additional $62
million of gross proceeds in the first quarter of fiscal 2015.
Capital and Exploration Expenditures, net of Proceeds of Farm-outs and Other
Arrangements
----------------------------------------------------------------------------
Year ended
(millions of U.S. dollars) March 31, 2014
----------------------------------------------------------------------------
Capital and exploration expenditures 231
Proceeds of farm-outs and other arrangements (40)
----------------------------------------------------------------------------
Net 191
----------------------------------------------------------------------------
India / Bangladesh
Capital and exploration expenditures in India and Bangladesh totaled $59 million
for fiscal 2014, including $16 million in the fourth quarter. Development
capital of $38 million for the year related primarily to the drilling of the
MA-8 development well and workovers/sidetrack operations in the D6 Block in
India and to a compression facility project in Block 9 in Bangladesh.
Exploration and evaluation capital of $20 million for the year related primarily
to the drilling of the successful MJ-1 discovery well and follow-up MJ-A1
appraisal well in the D6 Block in India. Exploration and evaluation costs
expensed directly to income of $2 million for the year related primarily to the
seismic acquisition and processing for the MJ field in the D6 Block in India.
Other Countries (primarily Indonesia and Trinidad)
Capital and exploration expenditures outside of India and Bangladesh totaled
$172 million for fiscal 2014. Exploration and evaluation capital of $72 million
for the year related primarily to the costs of three unsuccessful exploration
wells drilled in Indonesia and one well that had been planned to be drilled in
Trinidad, prior to the suspension of the Company's drilling programs in these
countries in the second quarter of the year. Capital inventory purchased for
wells not drilled in the year amounted to $25 million. Exploration and
evaluation costs expensed directly to income of $75 million for the year
included rig mobilization and standby costs incurred subsequent to suspension of
the drilling programs in Indonesia and Trinidad, costs related to seismic and
other exploration projects and branch office costs. In the fourth quarter,
exploration and evaluation costs expensed directly to income of $5 million
reflected the Company's reduction in staffing and exploration efforts outside of
India.
The Company's efforts on farm-outs and other arrangements generated proceeds of
$58 million for the year including net proceeds received from the farm-out of
the Cendrawasih block in Indonesia, the Company's exit from the Qara Dagh block
in Kurdistan, the farm-out of the Grand Prix block in Madagascar, and
consideration received in the fourth quarter of the year in exchange for
assuming a 100 percent interest in the Semai V block in Indonesia (including a
future drilling commitment). $40 million of these proceeds were reflected on the
statement of cash flows as cash related to investing activities, while $18
million of funds received from the farm-out of the Grand Prix block in
Madagascar that were in excess of the book value recorded for the property were
reflected as cash related to operating activities.
ESTIMATED RESERVES and ESTIMATED AFTER-TAX NET PRESENT VALUE OF FUTURE NET REVENUE
Estimated Reserves
----------------------------------------------------------------------------
As at March 31,
Gross(1) (Bcfe) 2014 2013
----------------------------------------------------------------------------
Proved(2) 584 564
Proved plus Probable(2) 826 821
----------------------------------------------------------------------------
(1) 'Gross' reserves are defined as those accruing to the Company's working
interest share before deduction of royalties and government share of
profit petroleum.
(2) Table includes 197 Bcf of proved natural gas reserves and 235 Bcf of
proved plus probable natural gas reserves related to the Company's
interest in Block 5(c) in Trinidad and Tobago that was sold subsequent
to March 31, 2014.
In fiscal 2014, net additions to proved reserves and to proved plus probable
reserves on a gas equivalent basis (before the impact of production) exceeded
production in the year, resulting in proved reserve replacement ratio of
approximately 150 percent and proved plus probable reserve replacement ratio of
approximately 110 percent.
India
Net additions to proved reserves on a gas equivalent basis (before the impact of
production) amounted to 13 Bcfe for the D6 Block, approximately seven percent of
the March 31, 2013 balance for the block, with virtually no revisions reflected
for proved plus probable reserves.
Bangladesh
Net additions to proved reserves on a gas equivalent basis (before the impact of
production) of 48 Bcfe were reflected for Block 9, increasing proved reserves to
128 Bcfe even after production of 21 Bcfe. This represents the second
consecutive year of strong results on a proved basis. Proved plus probable
reserves for Block 9 increased to 172 Bcfe from 150 Bcfe at March 31, 2013.
Trinidad and Tobago
The Company's estimated reserves as at March 31, 2014 included 197 Bcf of proved
natural gas reserves and 235 Bcf of proved plus probable natural gas reserves
related to its interest in Block 5(c) in Trinidad and Tobago that was sold
subsequent to March 31, 2014.
Estimated After-tax Net Present Value of Future Net Revenue
----------------------------------------------------------------------------
As at March 31,
(millions of U.S. dollars) 2014 2013
----------------------------------------------------------------------------
Proved(1) 695 761
Proved plus Probable(1) 1,147 1,299
----------------------------------------------------------------------------
(1) Table includes after-tax net present value of future net revenue of
$125 million for proved reserves and $159 million for proved plus
probable reserves related to the Company's interest in Block 5(c) in
Trinidad and Tobago that was sold subsequent to March 31, 2014.
After adjusting for the sale of the Company's interest in Block 5(c) in Trinidad
and Tobago that closed in the first quarter of fiscal 2015, the estimated
aggregate after-tax net present value of future net revenue attributable to the
Company's estimated proved plus probable reserves (discounted at 10 percent and
estimated using forecast prices and costs) as at March 31, 2014 is approximately
$1 billion.
Complete details of the Company's reserves and future net revenues attributable
thereto are contained in its Annual Information Form for the year ended March
31, 2014 which will be available on SEDAR at www.sedar.com.
FINANCIAL RESULTS
EBITDAX(1)
----------------------------------------------------------------------------
(millions of Quarter ended Quarter ended Year ended Year ended
U.S. dollars) Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2014 Mar. 31, 2013
----------------------------------------------------------------------------
EBITDAX 20 24 101 153
----------------------------------------------------------------------------
Loss (1) (448) (657) (216)
----------------------------------------------------------------------------
(1) EBITDAX is a non-IFRS measure as defined by the Company in its
quarterly filings of its Management's Discussion and Analysis on SEDAR
at www.sedar.com. The most comparable IFRS measure is net loss and a
reconciliation of EBITDAX to net loss is contained in the Company's
Management's Discussion and Analysis.
EBITDAX for the fourth quarter of fiscal 2014 was $20 million compared to $24
million for the third quarter of fiscal 2014, primarily due to the impact of
lower liquids sales volumes from the D6 Block in India and higher G&A expenses
related to legal cost of the ICSID arbitration cases in the quarter, partially
offset by higher natural gas sales volumes from the D6 Block and from Block 9 in
Bangladesh. EBITDAX for fiscal 2014 was $101 million compared to $153 million
for fiscal 2013, primarily due to lower sales volumes in India.
Net loss for the fourth quarter of fiscal 2014 was $(1) million compared to a
net loss of $(448) million for the third quarter of fiscal 2014. In the fourth
quarter of fiscal 2014, the Company recorded $20 million of other income related
to consideration received in exchange for assuming a 100 percent interest in the
Semai V block in Indonesia (including a future drilling commitment), partially
offset by a $16 million loss arising from the revaluation of the Company's
future obligation payments of six percent of its share of revenue from the D6
Block, commencing April 1, 2015. In the third quarter of fiscal 2014, the
Company recorded after-tax asset impairments totaling $339 million related to
the Company's exploration and evaluation assets in Indonesia and Trinidad,
exploration and evaluation expenses of $40 million, and restructuring costs of
$38 million. Net loss for fiscal 2014 was $(657) million compared to a loss of
$(216) million for fiscal 2013.
Complete details of the Company's financial results are contained in its
consolidated financial statements and Management's Discussion and Analysis for
the year ended March 31, 2014 which will be available on SEDAR at www.sedar.com.
LIQUIDITY AND CAPITAL RESOURCES
To provide the financial capacity to implement its new strategic focus of
developing and appraising the assets in the D6 Block in India while maintaining
optionality in the balance of its exploration portfolio, in the third quarter of
fiscal 2014, the Company entered into a new secured term loan facilities
agreement, closed an offering of equity securities, and executed a settlement
agreement with Diamond Offshore for drilling contract obligations. At closing,
the Company's revolving credit facility and secured loan agreement were fully
repaid and the outstanding principal amounts of its unsecured notes were reduced
with the terms of these notes amended to permit the holders to convert the
outstanding amounts into common shares prior to maturity in July, 2013. The $174
million of net proceeds from the above transactions provided significant
financial capacity for the Company's planned capital program, focused primarily
on developing and appraising the assets in the D6 Block in India.
Prices for natural gas sales from the D6 Block were expected to approximately
double effective April 1, 2014, as per the pricing formula approved by the GOI
in June, 2013 and included in the Domestic Natural Gas Guidelines, 2014
("Guidelines") published by the GOI in January, 2014. As per the Guidelines, the
pricing formula shall be applicable to all natural gas sales from the D6 Block,
subject to submission of bank guarantees related to incremental natural gas
revenues from the Dhirubhai 1 and 3 fields. The Company has been working with
Reliance, the operator of the D6 Block, on providing bank guarantees required by
the GOI as security in the case of an adverse outcome to the D6 contractor group
of the D6 cost recovery dispute arbitration proceedings. However, the GOI did
not notify the price calculated under these Guidelines for the quarter beginning
April 1, 2014, initially due to an election commission ruling that the price
should not be notified during the election campaign, and subsequently due to the
transition to a new government ruling party. Under protest but in good faith,
the contractor group for the D6 Block has kept supplying gas to its customers
and the customers have been paying for the gas supplied at the price specified
in the sales contracts that expired on March 31, 2014. In May 2014, the
contractor group for the D6 Block filed a notice of arbitration to the GOI
seeking the implementation of the Guidelines. The GOI has indicated that it is
working towards the announcement of a new natural gas price to be effective
October 1, 2014, but there is significant uncertainty at this time as to the
timing and magnitude of the price increase.
Sources of Funding
The Company has the following sources of cash for funding of its planned
operating, investing and financing cash outflows (including working capital
requirements):
-- Unrestricted cash and cash equivalents as at March 31, 2014 of $82
million;
-- Restricted cash as at March 31, 2014 of $79 million that is available
for funding of expenditures related to the D6 Block in India (including
working capital requirements);
-- Receipts of oil and natural gas revenues from its producing assets in
India and Bangladesh;
-- Potential proceeds from asset sales, farm-outs and other arrangements;
and
-- Potential proceeds from future equity or debt issues.
Annual average sales volumes for the Company in fiscal 2015 from existing
producing wells in its producing fields are targeted to be approximately equal
to the annual average sales volumes for fiscal 2014, with the sales volumes from
planned development activities in the D6 Block in the remainder of the year
dependent on the timing and results of these activities. EBITDAX for fiscal 2015
is dependent on the sales volumes and resolution of the natural gas pricing
increase. The Company's budget for its planned capital program for India and
Bangladesh in fiscal 2015 is approximately $70 million, with a potential
increase to $150-$200 million in fiscal 2016 depending on the resolution of the
gas price issue described above.
If the expected new price for natural gas sales from the D6 Block in India is
not notified by the GOI, then a significant portion of the contractor group's
planned investments in the block are expected to be deferred; and
-- the unrestricted and restricted cash and the forecasted receipts of oil
and gas revenues are expected to be sufficient to satisfy the
anticipated cash requirements of the Company's operating subsidiaries in
India and Bangladesh, its corporate general and administrative
expenditures, and its interest obligations for the foreseeable future.
If the expected new price for natural gas sales from the D6 Block in India is
notified by the GOI, effective, October 1, 2014, then the contractor group's
planned investments in the block for fiscal 2015 and fiscal 2016 are expected to
occur as currently planned; and:
-- If the bank guarantee required by the GOI is provided by Reliance on
behalf of the contractor group without a requirement for cash support
from the Company, then the unrestricted and restricted cash and the
forecasted receipts of oil and gas revenues are expected to be
sufficient to satisfy the anticipated cash requirements of the Company's
operating subsidiaries in India and Bangladesh, its corporate general
and administrative expenditures, and its interest obligations for the
foreseeable future.
-- If the bank guarantee required by the GOI is provided by Reliance on
behalf of the contractor group with full cash support from the Company
for the Company's share of the incremental natural gas revenue from the
Dhirubhai 1 and 3 fields, then the unrestricted and restricted cash and
the forecasted receipts of oil and gas revenues are expected to be
sufficient to satisfy the anticipated cash requirements of the Company's
operating subsidiaries in India and Bangladesh, its corporate general
and administrative expenditures, and its interest obligations for fiscal
2015. In this scenario, for fiscal 2016, the Company is expected to
require additional funding from asset sales, farm-outs and other
arrangements and/or future equity or debt issues and expects that it
will be able to raise the required funds from some or all of these
sources. However, there can be no assurance that these efforts will be
sufficient to satisfy the anticipated cash requirements of the Company's
operating subsidiaries in India and Bangladesh, its corporate general
and administrative expenditures, and its interest obligations.
As at March 31, 2014, the Company had $118 million of accounts payable and
accrued liabilities related to its exploration subsidiaries, primarily in
Indonesia and Trinidad, and has significant exploration work commitments over
the next several years. The terms of the Company's term loan facilities limit
the funding of capital expenditures and working capital requirements in these
areas and the Company is evaluating its options for these subsidiaries as part
of its strategy of maintaining optionality in its exploration portfolio. The
Company is working on selling or farming out interests in many of its
exploration production sharing contracts, rescheduling its exploration
commitments, and settling its vendor liabilities. Over the next few years, the
Company plans to limit its exploration expenditures outside of India and
Bangladesh, net of proceeds of farm-outs and other arrangements, to less than
$35 million per year. There is significant uncertainty regarding whether the
Company's efforts will be sufficient to allow certain of the Company's
exploration subsidiaries to meet existing and future obligations and continue
activities in the future.
As described above, there is material uncertainty that may cast significant
doubt about the ability of the Company to continue as a going concern.
Non-core Asset Dispositions, Farm-outs and Other Arrangements
In the first quarter of fiscal 2015, the Company closed the sale of its 25
percent interest in Block 5(c) in Trinidad and Tobago for net proceeds of $61
million and used the funds to repay $15 million of contract settlement
obligation owing to Diamond and repay the $20 million term loan Facility E. As
per the terms of the facilities agreement, the Company offered to prepay
approximately $26 million of the term loan and the lender group declined the
offer, resulting in additional cash being available for funding of the
anticipated cash requirements of its operating subsidiaries in India and
Bangladesh, its corporate general and administrative expenses, and its interest
obligations.
During fiscal 2014, the Company received proceeds of $58 million related to its
program of farm-outs and other arrangements, including certain consideration
received in the fourth quarter of fiscal 2014 in exchange for assuming a 100
percent interest in the Semai V PSC in Indonesia (including a future drilling
commitment). In the third quarter of fiscal 2014, the Company executed a
farm-out agreement with Range Resources for 50 percent of the Company's
interests in the Guayaguayare Shallow and Deep PSCs in Trinidad whereby Range
will earn its interests by funding two onshore commitment wells and a potential
onshore appraisal well at its sole expense, and will share the costs of an
offshore commitment well equally with Niko. This agreement is subject to
approval of the Government of Trinidad and Tobago.
Conference Call
Niko will be hosting its Q4 and year end results conference call on Friday, June
27, 2014 at 9:00 am MST/ 11:00 am EST. The conference call will be webcast and
the link to the webcast is http://www.gowebcasting.com/5584.
Forward-Looking Information
Certain statements in this press release constitute forward-looking information
within the meaning of applicable securities legislation. Specifically, this
press release contains forward-looking information relating to the proposed
shift in strategic focus of the Company, the proposed sale of non-core assets
and farm-out transactions involving exploratory production sharing contracts,
possible resolution of outstanding payables from the Indonesian and Trinidad
drilling programs, sources of funding for planned operating activities, drilling
activities in the D6 Block in India and the corresponding increases in sales
volumes from these drilling activities anticipated in fiscal 2015, forecast
EBITDAX for 2015, planned capital and exploration expenditures for 2015, and the
outcome and timing in respect of the determination by the GOI of the increased
pricing formula for natural gas sales in India. Undue reliance should not be
placed on forward-looking information. Such forward-looking information reflects
the Company's current beliefs and assumptions and is based on information
currently available to the Company. This forward-looking information is based on
certain key expectations and assumptions, including expectations and assumptions
regarding its future growth, results of operations, production, future capital
and other expenditures (including the amount, nature and sources of funding
thereof), competitive advantages, plans for and results of drilling activity,
environmental matters, business prospects and opportunities, prevailing
commodity prices and exchange rates, applicable royalty rates and tax laws,
future well production rates, the performance of existing wells, the success of
drilling new wells, the availability of capital to undertake planned activities,
the availability and cost of labour and services and general market conditions.
The reader is cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of preparation, may
prove to be incorrect. Actual results may vary from the information provided
herein as a result of numerous known and unknown risks and uncertainties and
other factors and such variations may be material. Such risk factors include,
but are not limited to: the risks associated with the oil and natural gas
industry in general, such as operational risks in development, exploration and
production, delays or changes in plans with respect to exploration or
development projects or capital expenditures, the uncertainty of estimates and
projections relating to production rates, costs and expenses, commodity price
and exchange rate fluctuations, government regulation, marketing and
transportation risks, environmental risks, competition, the ability to access
sufficient capital from internal and external sources, changes in tax, royalty
and environmental legislation, the impact of general economic conditions,
imprecision of reserve estimates, the lack of availability of qualified
personnel or management, stock market volatility, risks associated with meeting
all of the Company's financing obligations and contractual commitments
(including work commitments), the risks discussed under "Risk Factors" in the
Company's Annual Information Form for the year-ended March 31, 2014 ("AIF") and
in the Company's public disclosure documents, and other factors, many of which
are beyond the Company's control. Niko makes no representation that the actual
results achieved during the forecast period will be the same in whole or in part
as those forecast.
The reserves estimates presented herein are derived from the report of Deloitte
LLP, an independent qualified reserves evaluator and auditor. Information
relating to "reserves" are deemed to be forward-looking information, as they
involve the implied assessment, based on certain estimates and assumptions, that
the reserves described exist in the quantities predicted or estimated, and can
be profitably produced in the future to achieve the future net revenue
calculated in accordance with certain assumptions. The assumptions relating to
the reserves reported herein are contained in the reports of Deloitte LLP dated
June 25, 2014 and effective March 31, 2014 and are summarized in Niko's AIF.
Future net revenues associated with reserves do not necessarily represent fair
market value.
The forward looking information included in this press release is expressly
qualified in its entirety by this cautionary statement. The forward looking
information included herein is made as of the date of this press release and
Niko assumes no obligation to update or revise any forward looking information
to reflect new events or circumstances, except as required by law.
Non-IFRS Measures
The selected financial information presented throughout this press release is
prepared in accordance with IFRS, except for "EBITDAX" and "funds from
operations". The Company utilizes EBITDAX and funds from operations to assess
past performance and to help determine its ability to fund future capital
projects and investments. EBITDAX is calculated as net income before interest
expense, income taxes, depletion and depreciation expenses, exploration and
evaluation expenses, and other non-cash items (gain or loss on investments,
asset impairment, share-based compensation expense, restructuring expenses,
accretion expense, and unrealized foreign exchange gain or loss). Funds from
operations is calculated as cash flows from operating activities prior to the
change in operating non-cash working capital, the change in long-term accounts
receivable and exploration and evaluation costs expensed to the statement of
comprehensive income. Funds from operations should not be viewed as a substitute
for measures of financial performance presented in accordance with IFRS or as a
measure of a company's profitability or liquidity. This non-IFRS measure do not
have any standardized meaning prescribed by IFRS and is therefore unlikely to be
comparable to similar measures presented by other companies. Refer to the
Company's Management's Discussion and Analysis for details on these non-IFRS
financial measures.
FOR FURTHER INFORMATION PLEASE CONTACT:
Niko Resources Ltd.
Jake Brace
President
(403) 262-1020
Niko Resources Ltd.
Glen Valk
VP Finance & CFO
(403) 262-1020
www.nikoresources.com
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