Greenfields Petroleum

Greenfields Announces Financial Results for the Three Months Ended March 31, 2014


Houston, Texas – (May 28, 2014) – Greenfields Petroleum Corporation ("Greenfields" or the "Company"; TSXV: GNF and GNF.DB), an independent exploration and production company with producing assets in Azerbaijan, is pleased to announce its financial results for the first quarter 2014. Except as otherwise indicated, all dollar amounts referenced herein are expressed in United States dollars.

First Quarter 2014 Financial Results and Operating Highlights

  • The Company’s 33.33% share of Bahar Energy Limited (“Bahar Energy”) entitlement sales volumes averaged 435 bbl/d and 8,987 mcf/d or 1,933 boe/d in the first quarter 2014, an 11% improvement over the prior quarter and a 91% improvement over the first quarter 2013 on a barrel of oil equivalent basis.
  • Through its interest in Bahar Energy, the Company realized average oil and gas prices of $102.36 per barrel and $3.96 per mcf in the quarter.
  • The Company's 33.33% share of Bahar Energy provided net income of $3.2 million for the first quarter 2014 compared to a net loss of $2.1 million in the first quarter 2013. This improvement reflected revenues of $7.6 million for the first quarter 2014, a 29% improvement over the first quarter 2013, and a 58% reduction in operating costs versus first quarter 2013.
  • The Company recorded revenues of $0.4 million, had net income of $1.1 million and EPS of $0.06 (basic and diluted).
  • On January 31, 2014, Bahar Energy Operating Company (“BEOC”) informed SOCAR that they had maintained an average rate of 7,081 boe/d for the previous 92 consecutive days, and, as such, meeting the TPR1(1) requirement in accordance with the ERDPSA. This production milestone has been acknowledged by State Oil Company of Azerbaijan (“SOCAR”) with official notice still pending. Upon receipt of such official notice, Bahar Energy will be required to pay a $2.0 million bonus obligation ($667 thousand net to the Company) to SOCAR. Meeting the TPR1 requirement secures for the Contractor Parties in the ERDPSA the rights under the ERDPSA to the full twenty-five (25) year development and production period.
  • On April 17, 2014, BEOC informed SOCAR that on March 31, 2014, BEOC met the TPR2(2) requirement in accordance with the ERDPSA. BEOC is awaiting acceptance from SOCAR that the TPR2 obligation has been met. Once accepted by SOCAR, SOCAR Oil Affiliate (“SOA”), with a 20% interest, will be obligated to pay its share of costs going forward in the next calendar quarter. SOA will also begin to repay the carry that has been in place since the beginning of the project from SOA’s share of petroleum revenues attributable to cost recovery.

(1) TPR1 refers to Target Production Rate 1 under the ERDPSA whereby BEOC must maintain a daily production rate for 90 consecutive days equal to 1.5 times the average 2008 production rate, that rate being 6,944 boe/d.

(2) TPR2 refers to Target Production Rate 2 under the ERDPSA whereby BEOC must maintain a daily production rate for 30 consecutive days equal to 2 times the average 2008 production rate, that rate being 9,258 boe/d.

Operating highlights and plans

  • Work continued in the first quarter 2014 on the recording, processing and interpretation of up to 200 square kilometers of 3D seismic over the Gum Deniz Oil Field, which was contracted in 2013. At the end of the quarter, a total of 14 square kilometers of data had been acquired. Winter winds and seas impeded the seismic acquisition. The acquisition rate is expected to improve in the spring and summer months of 2014. Once the new data is acquired, processed, and interpreted, the revised Gum Deniz reservoir model will be used to improve well site selection for the drilling program.
  • The interpretation of the 3D seismic survey on the Bahar-2 exploration block recorded in 2012 continued during the first quarter 2014. Calibration of the wells to the seismic commenced using Vertical Seismic Profile (VSP) acquired during the quarter. Additionally, fluid substitution models are being calculated to determine the amplitude versus offset (AVO) response of the seismic. This calibration is expected to aid in the evaluation of multiple seismic amplitude anomalies seen on the block.
  • Three workovers were conducted in Bahar Gas Field resulting in production growth of approximately 14 mmcf/d. A total of 10 workovers were conducted in the Gum Deniz Oil Field yielding an estimated 250 bbl/d. The success of these workovers played a key role in reaching the TPR2 objective on March 31, 2014.
  • The GD-774 well reached target depth of 2,566 meters on January 26, 2014, and was completed in Horizon VIII at a production rate of approximately 25 bbl/d. Further testing is planned in Horizons VIII, VII, VI and V.
  • Drilling in Gum Deniz Oil Field has been delayed pending drilling rig modifications, a completion program evaluation, and a review of the subsurface interpretation which will focus on the results of wells drilled and recompleted to date, and on a subsequent prioritization of drilling locations. During the drilling delay, the focus will shift to recompletions on the Bahar Gas Field which have been successful to date at adding significant gas production, and on continued oil recompletions in the Gum Deniz Oil Field, along with production optimization and Electrical Submersible Pump (ESP) installations.
  • Construction activity in the first quarter 2014 continued to focus on platform upgrades, primarily in the Bahar Gas Field, to support workovers, and on facilities improvement in the tank farm and process area.

Select Financial and Operating Information for the three month ended March 31, 2014

The selected information below is from the Greenfields’ Management Discussion & Analysis. The Company's condensed consolidated financial statements as of and for the three months ended March 31, 2014 and 2013, with the notes thereto and the related Management’s Discussion & Analysis can be found either on Greenfields' website at or on SEDAR at All amounts below are in thousands of US dollars unless otherwise noted.

Greenfields Petroleum Corporation

Three months ended March 31,

(US$000’s,except as noted)







Net income (loss)



Net income (loss) per share, basic and diluted



Capital Items

Cash and cash equivalents



Total Assets



Working capital



Long term loan, convertible debt and shareholders’ equity



Bahar Energy Limited (Joint Venture) 33.33%

Total Joint Venture

Net to Company

(US$000’s,except as noted)

Three months ended March 31,











Net (loss) income






Average Entitlement Sales Volumes (1)

Oil and condensate (bbl/d)





Natural gas (mcf/d)





Barrel oil equivalent (boe/d)





Average Oil Price

Oil price ($/bbl)





Net realization price ($/bbl)





Brent oil price ($/bbl)





Natural gas price ($/mcf)





Capital Items

Total Assets





Total Liabilities





Net Assets





1) Daily volumes represent the Company’s share of the Contractor Parties entitlement volumes net of compensatory petroleum and the government’s share of profit petroleum. Effective October 1, 2013 the compensatory petroleum increased from 5% to 10% where it will remain until specific cumulative oil and gas production milestones are attained.

“We are very pleased to see the substantial improvements which began in 2013 have continued into 2014 on the Bahar project. The income improvements experienced in the fourth quarter 2013 continued into the first quarter 2014. Production has increased to new levels for natural gas and we have seen further reductions in project expenses as the cost savings measures started by the operating company in 2013 are being realized. With higher petroleum revenues and operating expenses less than half the 2013 level, Bahar Energy has had their best quarter to date” stated A. Wayne Curzadd, Senior Vice President and Chief Financial Officer of the Greenfields.

About Greenfields Petroleum Corporation

Greenfields is a junior oil and natural gas Company focused on the development and production of proven oil and gas reserves principally in the Republic of Azerbaijan. The Company plans to expand its oil and gas assets through further farm-ins, and acquisitions of Production Sharing Agreements from foreign governments containing previously discovered but under-developed international oil and gas fields, also known as “greenfields”. More information about the Company may be obtained on the Greenfields website at

Forward-Looking Statements

This press release contains forward-looking statements. More particularly, this press release may include, but is not limited to, statements concerning: increased average production, drilling and completion plans and the expected timing thereof, securing the production and operating period of the Bahar Contract, seismic acquisition and the Company’s operational plans. In addition, the use of any of the words “initial, “scheduled”, “can”, “will”, “prior to”, “estimate”, “anticipate”, “believe”, “should”, “forecast”, “future”, “continue”, “may”, “expect”, and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained herein are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the success of optimization and efficiency improvement projects, the availability of capital, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, general economic conditions, availability of required equipment and services, weather conditions and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct.

Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties most of which are beyond the control of Greenfields. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking information. These risks include, but are not limited to, risks associated with the oil and gas industry in general (e.g., 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 reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety, political and environmental risks), commodity price and exchange rate fluctuations, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional risk factors can be found under the heading "Risk Factors" in Greenfields’ Annual Information Form and similar headings in Greenfields’ Management’s Discussion & Analysis which may be viewed on

The forward-looking statements contained in this press release are made as of the date hereof and Greenfields undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. The Company’s forward-looking information is expressly qualified in its entirety by this cautionary statement.

Notes to Oil and Gas Disclosures

Barrels Oil Equivalent or “boe” may be misleading, particularly if used in isolation. The volumes disclosed in this press release in regards to TPR1 and TPR2 production targets under the headings “First Quarter 2014 Financial Results and Operating Highlights” uses a 5.559 mcf: 1boe conversion ratio as the Bahar Contract (ERDPSA) uses a 5.559 mcf: 1boe conversion ratio to measure total field production in calculating the 6,944 boe and 9,258 boe production thresholds for determining TPR1 and TPR2 target production milestones.

All volumes disclosed elsewhere in this press release use a 6mcf: 1boe, as such is typically used in oil and gas reporting and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The Company uses a 6mcf: 1boe ratio to calculate its share of entitlement sales from the Bahar Project for its financial reporting and reserves disclosure.

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.

For more information, please contact

Greenfields Petroleum Corporation

John W. Harkins A. Wayne Curzadd

Chief Executive Officer Chief Financial Officer

(832) 234-0836 (832) 234-0835

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