Greenfields Petroleum

Greenfields Announces Year End 2010 Results


Greenfields Petroleum Corporation Financial Results for theĀ Full Year Ended December 31, 2010

CALGARY, ALBERTA--(Marketwire - May 2, 2011) -

Greenfields Petroleum Corporation Announces financial results for the full year ended December 31, 2010


Greenfields Petroleum Corporation (TSX VENTURE: GNF.S) - today announced 2010 fourth quarter and year-end results.

HOUSTON, TX -- (Marketwire) - May 2, 2010 - Greenfields Petroleum Corporation (the "Company" or "Greenfields") (TSX-V: GNF.S), an independent exploration and production company with assets in Azerbaijan, announces the financial results for the year ended December 31, 2010. The functional and reporting currency of the Company is the United States dollar.

General Highlights:

  • The interest of the Company's 33.33%-owned joint venture, Bahar Energy Limited ("Bahar Energy"), in the Gum Deniz oil field and Bahar gas field became effective on October 1st, 2010.
  • Net production has been maintained at 1,314 Boe/d.
  • The year-end 2010 reserves report reflects an increase in PV10 of 36% to $169.0 million.
  • Work-over rig operations are to start in May 2011 and drilling operations are scheduled to start in the fourth quarter of 2011, both slightly ahead of schedule.

Fourth Quarter 2010 Highlights

  • A 33.33%-owned joint venture of the Company, Bahar Energy, assumed responsibility for the Bahar Exploration, Rehabilitation, Development and Production Sharing Agreement ("ERDPSA") from the State Oil Company of Azerbaijan ("SOCAR") effective October 1, 2010.

  • The Company issued 4,870,250 common shares to the public for estimated gross proceeds of approximately $40.4 million (CDN$41.4 million) including the issuing of 635,250 common shares upon closing of the over-allotment. Upon deducting agents commissions and estimated expenses of $3.4 million (CDN$3.8 million), estimated net proceeds received were $37.0 million (CDN$37.6 million).

Full Year 2010 Highlights

  • On February 24, 2010, the Company completed a private placement of 1,000,000 Units at CDN$5.00 per unit, each Unit consisting of one common share and one-half of one warrant. The CDN$5.0 million proceeds were converted to U.S. dollars totaling $4.7 million, and after deducting cash share issue costs of $0.2 million, the Company received net proceeds of $4.5 million.

  • On September 14, 2010, the Company completed the September Private Placement involving the issuance of 1,984,077 Common Shares at a price of CDN$6.50 per share for gross proceeds of approximately CDN$12.9 million (CDN$12.1 million after deduction of the agents fees). The Company converted the net Canadian dollar proceeds to U.S. dollars and after deducting cash share issue costs of $0.1 million, the Company received net proceeds of $11.7 million.


Mr. John W. Harkins, President and Chief Executive Officer of Greenfields, reports that all legal requirements were completed with the Government of Azerbaijan and SOCAR, which allowed for the Bahar ERDPSA to become fully effective on October 1, 2010. This completed the transfer of the interest in the Bahar ERDPSA to the Company's joint venture, Bahar Energy.

The independent evaluation dated April 19, 2011 prepared by Miller and Lents, Ltd. ("Miller Lents") with respect to the Bahar Energy Limited's ("Bahar Energy") reserves and future net revenues forecast as of December 31, 2010 (the "2010 Miller Lents Report") reflects an increase of 36% to $169.0 million in future net revenue attributable to Greenfields' proven reserves and its proved plus probable reserves, before deducting future income tax expenses, estimated using forecast prices and costs, and calculated using a 10% discount rate for the 2010 Miller Lents Report ("PV10 value"). A price deck of $99.29/Bbl. for 2011 declining to $93.46/Bbl. and a fixed gas price of $3.96/Mcf was applied in this report.

Key changes to this year's report include the restructuring of the Phase 1 work program and the movement of significant capital from the Bahar gas field development to increase the programmed development activity of the undeveloped oil reserves in the Gum Deniz field. This move has allowed the Company to increase our net proved and probable oil reserves (P1+P2) to 6.907 million barrels of oil and resulted in the net gas reserves being reduced to 27.734 billion cubic feet of natural gas as a result of the shift in capital in the Phase 1 program. Net capital investment for the company in Phase 1 was increased from $117.0 million to $142.0 million as a result of increasing the number of development oil wells set to be drilled in the Phase 1 program.

Operational Activities:

Mr. Rich MacDougal, Chief Operating Officer, advises that the major activity for the fourth quarter 2010 focused on accelerating the procurement of equipment required to start up both the extensive work-over and the drilling programs found in the Phase 1 development program of Bahar Energy. Management had previously projected that the work-over program would start in the middle of the summer of 2011 and the drilling program would start in the middle of the summer of 2012.

Bahar Energy recently contracted equipment from SOCAR to initiate the work-over program in May of this year. The Company has engaged three rigs which are currently being upgraded for service in the work-over program. It is anticipated that by May, all three SOCAR rigs will be working several months ahead of the previous work-over schedule. The SOCAR rigs are being used as work-over rigs and will ultimately be replaced in the fourth quarter of this year by two new purpose built work-over rigs to allow for faster and more efficient operations on the work-over programs in both Gum Deniz and Bahar fields.

On the drilling front, Bahar Energy has elected to also accelerate the program to take advantage of the higher oil price environment. Efforts are underway that should allow for possibly one or two drilling rigs to be on site drilling in the fourth quarter of this year. The program will start the drilling of the 57 proposed development wells located in Gum Deniz oil field as part of the Phase 1 development program originally scheduled for mid next year.

Mr. Alex Warmath, Chief Technical Officer, reports that during the fourth quarter 2010 the Company's share of production averaged 496 Boe/d and 4,909 Mcf/d or approximately 1,314 Boe/d. This production was produced from a total of 45 active wells from both the Gum Deniz and Bahar fields located in the Bahar ERDPSA. No drilling or significant re-completion activity was undertaken since the effective date of October 1, 2010, due to the lack of available equipment.

On the seismic front, Bahar Energy is currently engaged in shooting two programs in the Bahar ERDPSA over the two producing fields, which have never been shot with either 2-D or 3-D seismic, and the Bahar 2 exploration area. The acquisition of the 2-D program over the producing fields should be completed in June 2010. The 3-D seismic acquisition is underway on the Bahar 2 exploration area which is located between the Bahar gas field, found in the Bahar ERDPSA, and the Shah Deniz gas field operated by BP, which is located approximately 25 kilometers to the southeast of Bahar. Seventy-seven (77) square kilometers of the 3-D seismic was acquired by SOCAR by year-end 2010 and the balance of 63 square kilometers out of the planned total of 140 square kilometers is projected to be completed by August 2011.

Bahar Energy has approved a $60.8 million capital development program (Net $20.3 million to Greenfields) for the program year 2011. This capital work program is intended to create both growth and value in the existing Azerbaijan assets by increasing the reserves and production from rehabilitation, exploitation and development activities funded with cash on hand and cash flow from operations. This will enable Greenfields to be positioned to undertake new development and acquisition opportunities.

It can also be confirmed that Bahar Energy has submitted to SOCAR a multi-stage (Phase 1, 2, and 3) long term development plan for the Bahar and Gum Deniz fields found in the Bahar ERDPSA. We anticipate the approval of this multi-stage program by mid-year.

The following selected information is from the Company's Management Discussion and Analysis. The Company's complete financial statements as of and for the twelve-month periods ended December 31, 2010 and 2009, with the notes thereto and the related Management's Discussion and Analysis can be found either on Greenfields' website at or on SEDAR at All amounts are in US$ thousands.

Selected Information ($000s, except as noted)

Year Ended December 31







Loss from continuing operations



Per share, basic and diluted



Net (loss) income



Per share, basic and diluted



Operating (since effective date of ERDPSA on October 1, 2010)

Average oil/condensate production (Bbls/d) (1)



Average natural gas production (Mcf/d) (1)



Average oil equivalent production (Boe/d) (1)



Average oil price ($/Bbl)



Average natural gas price ($/Mcf)



Average net back oil price ($/Bbl)



Average Brent oil price ($/Bbl)



(1) Production volumes include compensatory petroleum and governments share of profit petroleum

Selected Balance Sheet Items


December 31,


December 31,


Total assets



Cash and cash equivalents



Working capital



Shareholders' equity



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