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ShaMaran 2013 Year End Financial and Operating Results

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 03/13/14 -- ShaMaran Petroleum Corp. ("ShaMaran" or the "Company") (TSX VENTURE:SNM)(OMX:SNM) is pleased to announce its financial and operating results for the year ended December 31, 2013. Unless otherwise stated all currency amounts indicated as "$" in this news release are expressed in thousands of United States dollars.


--  The Company reports initial recognition of reserves (property gross of
    58 MMbo 2P) as well as updates to estimated contingent resources
    (property gross of 518 MMboe 2C) and prospective resources (property
    gross unrisked best estimate of 245 MMboe) as of December 31, 2013 for
    the Atrush block. The reserves and resources estimates were provided by
    McDaniel & Associates Consultants Ltd, the Company's independent
    qualified resources evaluator. 
--  On November 13, 2013 General Exploration Partners, Inc. a fully owned
    subsidiary of the Company, issued $150 million of senior secured bonds.
    Net proceeds from the bond will be used to fund the Company's future
    capital expenditures related to the development of the Atrush Block. 
--  On October 7, 2013 the Company announced that the Kurdistan Regional
    Government ("KRG") had approved Phase 1 of the Field Development Plan
    for the Atrush Block with an October 1, 2013 effective date for the
    commencement of the Development Period. The Atrush Block, located 85
    kilometres northwest of Erbil and operated by TAQA Atrush B.V. is
    planned to have an initial production capacity of 30,000 barrels of
    gross oil per day with first oil expected by early 2015. 
--  The Atrush-4 Phase 1 development well spudded on October 20, 2013 and
    reached a total depth ("TD") of 2,916 meters on January 23, 2014.
    Atrush-4 is currently being tested. 
--  The Atrush-3 appraisal well, located 6.5 kilometres to the east of the
    Atrush-2 appraisal well, was spudded on March 25, 2013 and reached TD of
    1,806 meters on June 23, 2013 within the potential Phase 2 development
    area. The well confirmed the extension of the oil bearing Jurassic age
    Barsarin-Sargelu-Alan-Mus reservoir and extended the Deepest Proven Oil
    column by approx. 180 meters. Drill stem tests were conducted with
    hydrocarbons recovered to surface but due to equipment limitations
    accurate flow rates were not determined. Atrush-3 is currently
--  On March 12, 2013 the Contractor entities to the Atrush Block Production
    Sharing Contract ("PSC") were notified by the KRG that it had exercised
    its option to acquire a 25% Government Interest in accordance with the
    provisions of the Atrush Block PSC.


During the year ended December 31, 2013 the Company continued its appraisal and development campaign in respect of the Atrush petroleum property located in the Kurdistan Region of Iraq which constitutes the continuing operations of the Company. Atrush currently generates no revenues.

The Company has reported a net loss of $3.3 million in 2013, which was primarily due to routine general and administrative and share based payment expenses in respect of continuing operations, as well as the portion of uncapitalised interest expense on the Company's senior secured bonds, included as a finance cost. These charges have been offset by a gain on the release of an excess site restoration provision associated with the Company's discontinued operations in the United States.

Consolidated Statement of Comprehensive Income                              
(Audited, expressed in thousands of United States Dollars)                  
                                            For the year ended December 31, 
                                                       2013            2012 
Expenses from continuing operations                                         
General and administrative expense                   (2,393)         (2,852)
Share based payments expense                           (882)             (8)
Impairment (loss) / recovery                            (84)          1,814 
Depreciation and amortisation expense                   (65)           (183)
Share of income of associate                              -         129,000 
Gain on fair valuation of net assets of                                     
 subsidiary                                               -         102,735 
Gain on sale of asset                                     -           1,100 
Relinquishment costs                                      -         (25,732)
(Loss) / income before finance items and                                    
 income tax expense                                  (3,424)        205,874 
Finance cost                                           (740)           (719)
Finance income                                           28             359 
Net finance cost                                       (712)           (360)
(Loss) / income before income tax expense            (4,136)        205,514 
Income tax expense                                      (87)            (89)
Net (loss) / income from continuing                                         
 operations                                          (4,223)        205,425 
Discontinued operations                                                     
Net income / (loss) from discontinued                                       
 operations                                             935             (61)
Net (loss) / income for the year                     (3,288)        205,364 
Other comprehensive income:                                                 
Currency translation differences                         19              26 
Total other comprehensive income                         19              26 
Total comprehensive (loss) / income for the                                 
 year                                                (3,269)        205,390 
Consolidated Balance Sheet                                                  
(Audited, expressed in thousands of United States Dollars)                  
                                                         As at December 31, 
                                                        2013           2012 
Non-current assets                                                          
Intangible assets                                    344,990        303,549 
Property, plant and equipment                            179            257 
                                                     345,169        303,806 
Current assets                                                              
Cash and cash equivalents                            142,588         41,216 
Other current assets                                     194            331 
Inventories                                                -            198 
                                                     142,782         41,745 
Assets associated with discontinued operations             3              3 
Total assets                                         487,954        345,554 
Liabilities and equity                                                      
Current liabilities                                                         
Accounts payable and accrued expenses                  7,458          7,027 
Accrued interest expense on bonds                      2,252              - 
Current tax liabilities                                   92             90 
Deferred liability                                         -          5,000 
                                                       9,802         12,117 
Non-current liabilities                                                     
Borrowings                                           147,050              - 
Provisions                                             1,185            120 
                                                     148,235            120 
Liabilities associated with discontinued                                    
 operations                                              928          1,941 
Total liabilities                                    158,965         14,178 
Share capital                                        534,068        534,068 
Share based payments reserve                           4,718          3,836 
Cumulative translation adjustment                         27              8 
Accumulated deficit                                 (209,824)      (206,536)
Total equity                                         328,989        331,376 
Total liabilities and equity                         487,954        345,554 

The total assets reported at the end of the year 2013 have increased by $142 million relative to the total assets reported at the end of 2012 which was mainly due to the increase in the Company's cash and debt positions resulting from the issue during the year of $150 million of senior secured bonds.

The increase by $101.4 million in the cash position of the Company during year 2013 was the combined result of receiving net cash proceeds of $147 million on the issue of the bonds, while spending $39.8 million on Atrush Block appraisal and development activities, $5.0 million on the settlement of a deferred liability and $2.5 million on G&A and other cash expenses, and with $1.7 million of positive cash movements due to changes in working capital items.

Consolidated Cash Flow Statement                                            
(Audited, expressed in thousands of United States Dollars)                  
                                            For the year ended December 31, 
                                                     2013              2012 
Operating activities                                                        
Net (loss) / income from continuing                                         
 operations                                        (4,223)          205,425 
Adjustments for:                                                            
 Share based payments expense                         882                 8 
 Interest expense on senior secured                                         
  bonds - net                                         689                 - 
 Impairment loss / (recovery)                          84            (1,814)
 Depreciation and amortisation expense                 65               183 
 Foreign exchange loss / (gain)                        49              (333)
 Income tax                                             2               (32)
 Interest income                                      (28)              (26)
 Interest expense on equity based                                           
  finance fee                                           -               719 
 Gain on sale of asset                                  -            (1,100)
 Gain on fair valuation of net assets of                                    
  subsidiary                                            -          (102,735)
 Share of income of associate                           -          (129,000)
 Changes in provisions                              1,065               120 
 Changes in accounts payable and accrued                                    
  expenses                                            431           (16,550)
 Changes in inventories                               114             2,552 
 Changes in other current assets                      137               421 
Cash used in discontinued operations                  (78)             (715)
Net cash outflows to operating                                              
 activities                                          (811)          (42,877)
Investing activities                                                        
Interest received on cash deposits                     28                26 
Deferred liability                                 (5,000)            5,000 
Purchases of intangible assets                    (39,788)           (8,395)
Net proceeds on sale of intangible                                          
 assets                                                 -            52,671 
Proceeds on reimbursement of intangible                                     
 costs                                                  -             1,250 
Net proceeds on sale of property, plant                                     
 and equipment                                          -               802 
Purchases of property, plant and                                            
 equipment                                              -              (595)
Investment in associate                                 -           (16,110)
Net cash (outflows to) / inflows from                                       
 investing activities                             (44,760)           34,649 
Financing activities                                                        
Proceeds on bond issue                            150,000                 - 
Bond related transaction costs                     (3,028)                - 
Net cash inflows from financing                                             
 activities                                       146,972                 - 
Effect of exchange rate changes on cash                                     
 and cash equivalents                                 (29)              359 
Change in cash and cash equivalents               101,372            (7,869)
Cash and cash equivalents, beginning of                                     
 the year                                          41,216            49,085 
Cash and cash equivalents, end of the                                       
 year                                             142,588            41,216 


The outlook for the year 2014 is as follows:

Atrush Block

Following the KRG approval of Phase 1 plans are being implemented to achieve First Oil of 30,000 bopd gross by early 2015.

Testing of the AT-4 appraisal/development well is expected to be completed during the first quarter of 2014. Drilling plans for the year 2014 include drilling of AT-5, the third Phase 1 development well, followed by the Atrush-6 well. Further testing of the AT-3 well will also be conducted during 2014 following a planned re-entry.

The FEED for the Phase 1 Production Facilities was completed in October 2013. Orders for the production modules for the 30,000 bopd facilities were finalised in December 2013. Civil engineering at the selected facilities site commenced in early 2014.


The Board of Directors approved a budget for the year 2014 which includes net capital spending on the Atrush Block appraisal and development program and debt service and other costs totalling $101.0 million.

The Company believes that based on the forecasts and projections they have prepared its current financial resources are sufficient for the Company to satisfy its contractual obligations and commitments under the agreed work program over the next 12 months. Nevertheless the potential remains that the Company's financial resources will be insufficient to fund its obligations over the next 12 months. The Company has a number of financing possibilities which it believes it would be able to pursue if and when required.

New Ventures

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


ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration vehicle with a 20.1% direct interest in the Atrush oil discovery, which is currently undergoing appraisal and development.

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". 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 Securities AB.

The Company's annual consolidated financial statements, notes to the financial statements, management's discussion and analysis and Annual Information Form have been filed on SEDAR (www.sedar.com) and are also available on the Company's website (www.shamaranpetroleum.com). The Annual Information Form includes the Company's reserves and resource data as at December 31, 2013 as provided by McDaniel & Associates Consultants Ltd and other oil and natural gas information prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

ShaMaran will hold an annual general meeting of shareholders on June 18, 2014 in Vancouver, British Columbia.


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.


Pradeep Kabra, President and CEO

ShaMaran Petroleum Corp.
Keith Hill
(604) 806-3583
[email protected]

ShaMaran Petroleum Corp.
Pradeep Kabra
President and CEO
0041 22 560 8605
[email protected]

ShaMaran Petroleum Corp.
Sophia Shane
Corporate Development
(604) 689-7842
(604) 689-4250 (FAX)
[email protected]

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