Maha Energy AB (publ) (“Maha” or the “Company”) is pleased to announce its fourth quarter results. The report is attached to this press release and available on the Company’s website at www.mahaenergy.ca.

Highlights
(all amounts are in US dollars unless otherwise noted)

Fourth Quarter 2022

• The Company announced the signing of a binding term sheet envisioning a business combination with DBO 2.0 and expecting to close after obtaining the approval on Maha’s EGM on 29 March 2023.
• The Company announced the sale of its Brazilian subsidiary for a total consideration of USD 186.9 million, with a purchase price of USD 138 million plus USD 9.3 million in net working capital adjustment, USD 3.7 million net cash adjustment, and USD 36.1 million to be paid upon successful achievement of earnout milestones.
• The Company successfully completed a directed new share issue of 23.9 million shares and raised proceeds of approximately USD 20.0 million to reinforce the balance sheet.
• Three new executive managers appointed, including new CEO, CFO and CLO.
• Daily oil & gas production for Q4 2022 averaged 2,621 BOEPD (Q4 2021: 3,098 BOEPD) of which continuing operations averaged 280 BOEPD (Q4 2021: 247 BOEPD) and discontinued operations averaged 2,341 BOEPD (Q4 2021: 2,851).
• Revenue of 17.3 million (Q4 2021: 17.8 million) of which 2.0 million (Q4 2021: 2.0 million) relates to the continuing operations and 15.3 million (Q4 2021: 15.8 million) relates to discontinued operations.
  • Operating netback of 9.8 million (Q4 2021: 11.9 million) of which 1.0 million (Q4 2021: 1.1 million) relates to the continuing operations and 8.8 million (Q4 2021: 10.8 million) relates to the discontinued operations.
• EBITDA of 8.8 million (Q4 2021: USD 15.6 million) of which -1.3 million (Q4 2021: -0.5 million) relates to the continuing operations and 10.1 million (Q4 2021: 16.1 million) relates to the discontinued operations.
• Net result of 0.1 million (Q4 2021: USD 7.4 million) of which -3.6 million (Q4 2021: -3.8 million) relates to the continuing operations and 3.7 million (Q4 2021: 11.1 million) relates to the discontinued operations.
  • Basic and Diluted earnings per share of 0.00 (Q4 2021: 0.06) of which basic and diluted earnings per share for the continued operations is -0.03 (Q4 2021: -0.03) and basic and diluted earnings per share for the discontinued operations is 0.03 (Q4 2021: 0.09).

Full Year 2022

• Daily oil & gas production averaged 3,213 BOEPD in 2022 (2021: 3,387 BOEPD) of which continuing operations averaged 401 BOEPD (2021: 212 BOEPD) and discontinued operations averaged 2,812 BOEPD (2021: 3,175).
• Revenue in 2022 of 89.8 million (2021: 68.3 million) of which 12.3 million (2021: 5.7 million) relates to the continuing operations and 77.5 million (2021: 62.6 million) relates to discontinued operations.
• Operating netback in 2022 of 60.7 million (2021: 46.1 million) of which 6.5 million (2021: 2.9 million) relates to the continuing operations and 54.2 million (2021: 43.2 million) relates to the discontinued operations.
• EBITDA in 2022 of 55.1 million (2021: 47.7 million) of which -0.4 million (2021: -2.2 million) relates to the continuing operations and 55.5 million (2021: 49.9 million) relates to the discontinued operations.
• Net result for 2022 of 22.9 million (2021: 21.6 million) of which -12.5 million (2021: -13.3 million) relates to the continuing operations and 35.4 million (2021: 34.9 million) relates to the discontinued operations.
  • Basic and Diluted Earnings per share in 2022 of 0.19 (2021: 0.19) of which basic and diluted earnings per share for the continued operations is -0.10 (2021: -0.12) and basic and diluted earnings per share for the discontinued operations is 0.29 (2021: 0.31).
• Cash and cash equivalents balance on 31 December 2022 of USD 23.2 million (2021: USD 25.5 million) of which 19.5 million (2021: 18.4 million) relates to the continuing operations and 3.7 million (2021: 7.2 million) relates to the discontinued operations.

Financial Summary
The table below relate to continuing and discontinued operations combined:

The table below presents the highlights of the continuing operations:

The table below presents the highlights of the discontinued operations:

Letter to shareholders

Dear Friends and Fellow Shareholders of Maha Energy AB,

The fourth quarter of 2022 triggered a transformational moment for Maha with the incorporation as shareholder of the Investment Fund managed by Starboard, a Brazilian private equity firm, becoming the largest shareholder with 19.9% ownership. This significant change on Maha’s shareholder structure, board of directors and management, brought renewed leadership and sectorial expertise with successful track-record in the Latin American energy industry.

Among the changes that happened since last November, it is important to highlight the following events:

1. Changes in the Board of Directors: Three new directors were indicated as Maha’s Board Members with an extensive general management and finance background in the energy industry, specifically in junior oil & gas companies (Fabio Vassel and I are both former founders and chairmen of 3R Petroleum, a USD 2.0 billion Brazilian oil & gas listed company);
2. Changes in the Management: Three new executive managers joined Maha in the last quarter:
   1. I, Paulo Mendonça was also indicated as Chief Executive Officer, renewing Maha’s leadership;
   2. Bernardo Guterres was indicated as the new Chief Finance Officer of Maha, bringing all his knowledge and expertise from a 15-year career within top tier international banks and high ranked Brazilian private equity firms, with the mission of optimizing the Company’s current capital structure and to lead the exciting and important M&A strategy;
   3. Barbara Bittencourt was indicated as Chief Legal and Compliance Officer, a new executive position in the Company. The main objective was to bring technical and legal support within a sector that have lots of complex regulatory frameworks throughout different countries. Barbara has an extensive career as partner in top tier legal firms, with the past 10 years exclusively dedicated to the oil & gas market.
3. In the beginning of December 2022, Maha and DBO 2.0 (“DBO”) signed a binding term sheet envisioning a business combination among the companies. DBO has 15% equity interest in 3R Offshore, which owns and operates two offshore clusters in Brazil – Papa Terra and Peroá. When closed, this deal shall bring an interesting value for Maha’s shareholders as it will be executed at an attractive entry multiple of 0.2x P/NAV (issuance of 36.8 million shares). Upon closing, this transaction will increase Maha’s net 2P reserves with ~18.5 million BOE and is estimated to add ~2,000 BOEPD net production in 2023 with further upside through ramp-up at Papa Terra, and Peroá fields, as well as the potential Malombe development (part of Peroá cluster). The transaction reinforces the construction of a diversified portfolio balanced between mature oil and gas onshore and offshore assets with a cash-flow oriented approach. The closing of this transaction is expected to happen after the approval on Maha’s EGM on 29 March 2023.
4. During mid December 2022, Maha successfully raised approximately USD 19 million (net of fees) through a direct share issue, improving and enhancing its previous capital structure and bringing a new base of shareholders that have a long-term investment profile. This capital raise strengthened the Company’s investor base, attracting new institutional and international investors.
5. During the last week of December 2022, Maha signed the sale of its Brazilian subsidiary Maha Brazil to Petroreconcavo, a Brazilian listed junior oil & gas company with current market cap of approximately USD 2.0 billion, for total acquisition consideration that can reach USD 186.9 million. Considering the proceeds of the sale of the Brazilian assets (including earn-outs) together with the cash at the end of Q4 2022 and the proceeds from the capital raise in mid-December, minus the outstanding bank debt, Maha’s cash position would be higher than its current market capitalization, giving the Company ability to pursue new opportunistic acquisitions.

The above mentioned events illustrates what the new management of Maha is pursuing for the upcoming years, which can be summarized as: (i) financial optimization, improving the Company’s capital structure and capital allocation; (ii) optimization of CAPEX and OPEX to capture superior returns out of the deployed capital; and (iii) search for opportunistic targets that can be acquired at attractive entry prices and with potential scalability within its production ramp-up.

During Q4 2022, the Brazilian production was fully recovered with the workover campaign successfully completed and all production wells back on stream, with improved artificial lift and tubing leaks repaired as required. The Tie-6 well commenced water injection into the Agua Grande formation to aid in pressure maintenance and oil recovery plans. In Tartaruga, the TTG-3 well was converted to a water disposal well for produced water which will eliminate the need to truck water from Sergipe to Bahia province for treating and will reduce operating costs significantly. Good progress was made in Oman with the conclusion of the assignment of Maha’s 35% work interest to Mafraq Energy. The Company is now looking forward to start testing these wells in the near-term and further appraising the Mafraq field. The Company will update the market of its developments in Oman as soon as possible. Finally, in the US our production was very stable in the Illinois Basin and averaged 280 BOPD over the quarter with minor maintenance workovers carried out to keep all wells producing.

From a financial standpoint, Q4 2022 was a transitional quarter for Maha. Total production was 2,621 BOEPD and for the full year was 3,213 BOEPD. Even though the production improved from the third quarter 2022, revenues and net results for the fourth quarter were lower due to decreasing realized oil price compared to the third quarter 2022 and high general and administrative costs relating to the transactions occurred during the quarter. For the full year 2022 revenue was USD 89.8 million compared to full year 2021 revenue of USD 68.3 million, representing a 31.5% increase. Operating netback for the current year was impacted by workover costs and inflation; however, Maha’s full year 2022 operating netback of USD 60.7 million was much higher than the full year 2021 operating netback of USD 46.1 million. Maha closed the quarter with gross debt of USD 46.1 million and a cash position of USD 23.2 million (including cash relating to the discontinued operations). Maha ended the year 2022 with EBITDA of USD 55.1 million compared to EBITDA of USD 47.8 million for 2021, an increase of 15.3% on a year over year basis.

Overall, with the above information and figures, which represent a challenging transition phase for Maha, the Company is now actively working in pursuing attractive opportunities to create value for its shareholders.

Yours sincerely, 

Paulo T. Arantes de Mendonça (CEO)

Q4 Webcast tomorrow 1 March at 18:30 CET

There will be a live webcast tomorrow, on 1 March at 18:30 CET (Sweden time) to present the quarterly results and provide an operational update. A link to the webcast is available on the Company’s website: www.mahaenergy.ca. Questions posted on the day of the presentation should be made directly in the YouTube Comments/Questions field. The webcast will be broadcast live on Nyhetsbyrån Direkts Youtube Channel and is hosted by the Company Laika and will feature representatives from Maha.

This information is such information as Maha Energy AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 19:45 CET on February 28, 2023.

For more information, please contact:

Paulo Mendonça (CEO)
Tel: +46 8 611 05 11
info@mahaenergy.ca

Bernardo Guterres (CFO)
Tel: +46 8 611 05 11
info@mahaenergy.ca

About Maha
Maha Energy AB (publ) is a listed, international upstream oil and gas company whose business activities include exploration, development and production of crude oil and natural gas. The strategy is to target and develop underperforming hydrocarbon assets on global basis. Maha operates three oil assets: Block-70 (Oman), Powder River (LAK Ranch) and Illinois Basin in the United States. The shares are listed on Nasdaq Stockholm (MAHA-A). The head office is in Stockholm, Sweden with a technical office in Calgary, Canada, as well as operations offices in Grayville, Illinois, USA and Rio De Janeiro, Brazil. For more information, please visit our website www.mahaenergy.ca

Maha Energy AB (publ) (“Maha” or the “Company”) is pleased to announce its fourth quarter results. The report is attached to this press release and available on the Company’s website at  www.mahaenergy.ca.

Fourth Quarter 2021

• Daily oil & gas production for Q4 2021 averaged 3,098 BOEPD (Q4 2020: 2,738 BOEPD)
• Revenue of USD 17.8 million (Q4 2020: USD 8.7 million)
• Operating netback of USD 11.9 million or USD 42.37 per BOE (Q4 2020: USD 4.2 million or USD 17.66 per BOE)
• EBITDA of USD 15.6 million (Q4 2020: USD 2.7 million)
• Net result of USD 7.4 million (Q4 2020: USD -15.7 million)
• Basic Earnings per share of USD 0.06 (Q4 2020: USD -0.15)
• Diluted Earnings per share of USD 0.06 (Q4 2020: USD -0.15)
• Subsequent to year end, the company announced 24-hour test results of 4,400 BOPD and 1,766 MSCFPD (4,695 BOEPD) on the Tie-4 well using an Electric Submersible Pump (ESP).
• On January 25^th 2022, the Tie-5 Agua Grande (AG) horizontal well in Brazil was spudded.

Full Year 2021

• Daily oil & gas production for 2021 averaged 3,387 BOEPD (2020: 3,301 BOEPD)
• Revenue of USD 68.3 million (2020: USD 39.0 million)
• Operating netback of USD 46.1 million or USD 38.18 per BOE (2020: USD 23.5 million or USD 20.06 per BOE)
• EBITDA of USD 47.7 million (2020: USD 18.1 million)
• Net result for the period of USD 21.6 million (2020: USD -10.3 million)
• Basic Earnings per share of USD 0.19 (2020: USD -0.10)
• Diluted Earnings per share of USD 0.19 (2020: USD -0.10)
• Cash and cash equivalents balance of USD 25.5 million (2020: USD 6.7 million)

Financial Summary

Letter to shareholders

Tie-4    4,695 BOEPD
After experiencing severe hole problems trying to land the Tie-4 well as a horizontal producer in the Agua Grande (AG) reservoir, it was decided to reconfigure the well to a vertical producer.  Once the well was plugged back and sidetracked, it did not take long to reach the total depth of 2,221 m on December 17th, 2021.  Initial rig based production tests gave preliminary indications of what was to come, and when the new Electric Submersible Pump (ESP) was finally engaged a month later, it quickly became evident that Tie-4 was to become a record well for Maha.  It is the best producing well ever drilled in the Company’s short history, and in Brazil it ranks as the third best well ever drilled onshore Brazil.  In fact, during the testing operations, all but one well had to be temporarily shut in to accommodate the oil production from Tie-4.

Tie Field
Going forward on the Tie field, the GTE-3 well requires a workover to fix a leak in the tubing.  This well will also be recompleted with an ESP. The ESP allows for greater drawdown of the reservoir, which translates to higher production volumes compared to a hydraulic jet pump.  A drawback of the ESP, however, is that if it breaks it requires a rig assisted intervention, which is costly and takes valuable time.

Furthermore, the Tie-3 well is being converted to a edge water injector to provide important reservoir pressure maintenance.  Reservoir pressure maintenance benefits ultimate oil recovery and reduces gas production from the wells.  Finally, the ALV-2 water injector requires a tubing change to accommodate gas re-injection.

These planned workovers and the planned hook up of the Tie-5 well will affect Tie production volumes during 2022.

Tie-5 – an important horizontal well
The Tie-5 well was spudded on January 25, 2022 and is currently drilling in the main 12-1/4” hole.  Significant changes have been made to the well design to address the drilling obstacles encountered whilst trying to land the Tie-4 well. Changes include; deepening of the 9-5/8” casing shoe, drilling the troublesome Lower Candeias in a shorter section and maintaining a wellbore inclination less than 60 degrees. The Tie-5 well will also be completed using an ESP.

Completion of the Tie-5 well is expected during the second quarter of this year and will provide important spare production capacity to the Tie field.  The 500 meter horizontally completed well will access up to 4 times more oil than a conventional vertical producer. And more importantly, it will also serve as swing producer so that the production plateau can be maintained even if a well goes down for maintenance.

Oman
The Mafraq team have been busy procuring long lead items and services for the upcoming drilling program in Oman.  At the moment, three drilling rigs are being evaluated with a view to start drilling sometime during the second quarter of 2022.

Illinois Basin (IB)
At our IB properties, Hayden Ott and his team have been busy hooking up all the wells drilled last year to production tanks.  At the end of 2021, all wells had been hooked up and all but one were producing oil. Production rates are as expected and although five wells took longer to dewater stimulation fluids than expected, February (to date) average production is 476 BOPD.  The last well, Ford-35-3, is now hooked up to a pump and is showing signs of good oil production as well.

Even though the price of oil is conducive for drilling more wells in IB, the Company will continue to further evaluate production results from the twelve wells drilled during 2021 before deciding on further drilling in 2022. However, two commitment wells will be drilled during the first half of 2022.

Since the oil price collapse of 2014, and the ensuing pandemic of 2020/21, the oil industry has been hit hard.  Capital investment into the industry has suffered and as demand continues to grow unabated, despite calls for the great energy transition, the world is now finding it-self short of oil and gas. Maha is well positioned in this very exciting industry to deliver more barrels and more gas as demand continues to increase. With the addition of Oman, where approximately half of the Company’s future reserves and resources are located, Maha is poised for further growth.  Maha has gone from 1,000 BOEPD in 2017 to 4,275 BOEPD in January, 2022 – and that with a pandemic to boot.

Finally, I wish to thank my fellow Maha colleagues who work so tirelessly for all of us, and to all loyal shareholders who support us.  Thank you!

Yours truly,

Jonas Lindvall
Managing Director

Q4 Webcast today at 16:00 CET

There will be a live webcast today, 28 February at 16:00 CET (Sweden time) to present the quarterly results and provide an operational update. A link to the webcast is available on the Company’s website: www.mahaenergy.ca. Questions posted on the day of the presentation should be made directly in the YouTube Comments/Questions field. The webcast will be broadcast live on Nyhetsbyrån Direkts Youtube Channel and is hosted by Laikas’ Mr. Kaarlo Airaxin, and will feature Maha’s CEO Jonas Lindvall and CFO Andres Modarelli.

This information is such information as Maha Energy AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 07:30 CET on 28 February, 2022.

For more information, please contact:        
Jonas Lindvall (CEO)
Tel: +46 8 611 05 11        
jonas@mahaenergy.ca

Andres Modarelli (CFO)
Tel: +46 8 611 05 11       
andres@mahaenergy.ca

Victoria Berg (Investor Relations)
Tel: +46 8 611 05 11      
victoria@mahaenergy.ca

About Maha
Maha Energy AB (publ) is a listed, international upstream oil and gas company whose business activities include exploration, development and production of crude oil and natural gas. The strategy is to target and develop underperforming hydrocarbon assets on global basis. Maha operates four oil fields: Tartaruga and Tie in Brazil, Powder River (LAK Ranch) and Illinois Basin in the United States. The shares are listed on Nasdaq Stockholm (MAHA-A). The head office is in Stockholm, Sweden with a technical office in Calgary, Canada, as well as operations offices in Grayville, Illinois, USA and Rio De Janeiro, Brazil. For more information, please visit our website www.mahaenergy.ca

¹ Net result of Q4 2020 and full year 2020 includes an impairment charge of USD 21.0 million.

Maha Energy AB Announce Filing of Fourth Quarter Report 2020 & Live Webcast

Maha Energy AB (publ) (“Maha” or the “Company”) is pleased to announce its fourth quarter results. The report is attached to this press release and available on the Company’s website at  www.mahaenergy.ca.

Fourth Quarter 2020

• Daily oil & gas production averaged 2,738 BOEPD (Q4 2019: 3,165 BOEPD)
• Revenue of USD 8.7 million (Q4 2019: USD 13.7 million)
• Operating netback of USD 4.2 million or USD 17.66 per BOE (Q4 2019: USD 9.8 million or USD 35.00 per BOE)
• EBITDA of USD 2.7 million (Q4 2019: USD 8.4 million)
• Net result of USD -15.7 million, following the previously announced impairment charge of 21.0 million for LAK Ranch (Q4 2019: USD 2.7 million)
• Basic earnings per share of USD -0.15 (Q4 2019: USD 0.03)
• Diluted earnings per share of USD -0.15 (Q4 2019: USD 0.02)
• The Company was awarded new exploration block 70 (Mafraq) onshore Oman
• Drilled and completed the Tie-2 well in the Tie Field and spudded the Tie-3 well on 18 December 2020
• 2P Reserve Replacement Ratio for 2020: 380% (Q4 2019: 147%)
• The Company grew its Proven (“1P”) reserves by 183% increase driven by successful movement of volumes from the Proved plus Probable (“2P”) category and acquisitions in the USA and Oman. The 2P oil reserves are also up by approximately 14% compared to year end 2019
• The Company transferred its listing and began trading on Nasdaq Stockholm main market (MAHA-A.ST) on 17 December 2020

      
      
Full Year 2020

• Daily oil & gas production averaged 3,301 BOEPD (2019: 3,044 BOEPD).
• Revenue of USD 39.0 million (2019: USD 55.6 million)
• Operating netback of USD 23.5 million or USD 20.06 per BOE (2019: USD 41.5 million or USD 38.96 per BOE)
• EBITDA of USD 18.1 million (2019: USD 35.9 million)
• Net result for the period of USD -10.3 million, following the earlier announced impairment charges of 21.0 million for LAK Ranch (2019: USD 19.7 million)
• Basic Earnings per share of USD -0.10 (2019: USD 0.20)
• Diluted Earnings per share of USD -0.10 (2019: USD 0.18)
• Cash and cash equivalents balance of USD 6.7 million (2019: 20.4 million)

      
Financial Summary

^[1] Net result of Q4 2020 and full year 2020 includes an impairment charge of USD 21.0 million.

Letter to shareholders

Dear Friends and Fellow Shareholders of Maha Energy AB,

A combination of unplanned events during the last quarter of 2020 made it a challenging quarter for the Company.  First, the Covid-19 postponement of drilling Tie-2 and Tie-3 meant costly deferment of production for the year.  Second, two stuck pipe incidents on the Tie-2 well caused unwanted expenditures and further delays in production additions.  Third, the unexpected temporary loss of the free-flowing Tie-1 Agua Grande (AG) zone caused further production loss during the fourth quarter.  Lastly, the continuing and problematic GTE-4 workover at Tie required multiple rig interventions that resulted in higher workover costs and even more delay of production. All these events conspired against the production plan for the quarter and indeed the full year of 2020. 

Despite this, Maha finished 2020 with a record year in terms of annual average production (albeit below our expectations) and positive operations cash of USD 19 million.  With a 2020 CAPEX outflow of approximately USD 20 million (excluding acquisitions), it meant that the Company was close to being self-funded for the year – which is outstanding given the impact Covid-19 incurred on oil price, logistics and personal health.  

Towards the end of 2020, the Tie-2 well was finally completed and flowed over 2,000 BOEPD which was well above expectation.  Furthermore, the AG zone came in structurally higher than expected, and the reservoir pressure was also higher than anticipated at this location.  Both very positive outcomes.  Tie-1 (AG) production was also restored at the year end, and the GTE-4 well was finally completed after several months of multiple interventions.  During January, the GTE-4 well was flow-tested, and is now awaiting a dedicated quintuplex pump to be installed.  Two long lead time quintuplex pumps were ordered in April last year in anticipation of reduced flowing pressures at Tie-1 and Tie-2.  Both those pumps are now in the field undergoing hook up and commissioning. Whilst GTE-4 is awaiting pump installation, the Tie field is ‘missing’ about 500 BOPD production.

The drilling of the Tie-3 well is expected to be completed during the current quarter.  At the moment, and without the contribution of GTE-4, the Tie field is producing around 3,100 BOEPD, so Tie-3 will be a welcome addition to the current production volumes at Tie.  Upon completion of Tie-3, the drilling rig will be moved to the GTE-4 pad where it will drill the field’s first horizontal well (subject to licensing).  Once the horizontal well is drilled, completed and hooked up, the Tie field will have important spare production capacity to cater for any future unplanned production interruptions.

Also during the fourth quarter, Maha was admitted to Nasdaq Stockholm, which is something very beneficial for the Company.  The process was long but useful.  The Company’s very robust corporate governance is now even more robust.   The current ESG climate and the anti-fossil energy sentiment in Scandinavia is a challenge for all fossil-energy sector related companies and it is envisaged that being listed on the ‘main board’ will reaffirm to investors that ESG is deeply rooted in the organization.  Having said that, Maha Energy is an international oil and gas production company that produce oil, gas and energy in an industry that currently provide 85% of all global energy needs.  As such, Maha is proud to be considered one of the ‘good guys’ in that we bring expertise and technology to extract already existing hydrocarbons that might otherwise be left behind. And on top on that – none of the resources Maha produce are wasted.  In Brazil, for example, the associated gas produced there is separated, cleaned and converted to energy for use in homes and industries.  The produced water is also separated, cleaned and reused at most of the sites to re-invest in reservoir energy, thereby increasing the recovery factor of the fields.

Whilst 2020 was challenging year for Maha, it was also a year where Mafraq (Oman) and Illinois Basin (USA) were added to the asset portfolio.  Both these assets are high quality – low risk – assets that have added some 3 million barrels of 2P reserves and over 22 million barrels of Contingent Resources.  The 2020 2P reserve replacement ratio of 380% is excellent, clearly indicating Maha now has a very strong foundation to build on.

2021 has already started out on several positive notes; the oil price is up over 50% since the lows of Q4 production has been across all key assets and the Company has laid the foundation for serious production growth in all the core areas of Brazil, Oman and the USA. 

My fellow shareholders, colleagues, and friends, it feels like we are on the doorstep to brighter times.  Thank you for your continued support and lastly, a big thank you to all Maha employees that I know work so hard for all of us!

Stay healthy. Care for each other and stay safe.
Yours truly,

Jonas Lindvall
Managing Director

Q4 Webcast today at 16:00 CET

There will be a live webcast today, 26 February at 16:00 CET (Sweden time) to present the quarterly results and provide an operational update. A link to the webcast is available on the Company’s website: www.mahaenergy.ca. Questions posted on the day of the presentation should be made directly in the YouTube Comments/Questions field. The webcast will be broadcast live on Nyhetsbyrån Direkts Youtube Channel and is hosted by Laikas’ Mr. Kaarlo Airaxin, and will feature Maha’s CEO Jonas Lindvall and CFO Andres Modarelli.

This information is such information as Maha Energy AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 3:00a.m. CET on 26 February, 2021.

For more information, please contact:        
Jonas Lindvall (CEO)
Tel: +46 8 611 05 11        
jonas@mahaenergy.ca

Andres Modarelli (CFO)
Tel: +46 8 611 05 11       
andres@mahaenergy.ca

Victoria Berg (Investor Relations)
Tel: +46 8 611 05 11      
victoria@mahaenergy.ca

About Maha
Maha Energy AB (publ) is a listed, international upstream oil and gas company whose business activities include exploration, development and production of crude oil and natural gas. The strategy is to target and develop underperforming hydrocarbon assets on global basis. Maha operates four oil fields: Tartaruga and Tie in Brazil, Powder River (LAK Ranch) and Illinois Basin in the United States. The shares are listed on Nasdaq Stockholm (MAHA-A). The head office is in Stockholm, Sweden with a technical office in Calgary, Canada, as well as operations offices in Grayville, Illinois, USA and Rio De Janeiro, Brazil. For more information, please visit our website www.mahaenergy.ca

                                   
Press release
Stockholm
28 February 2020
                                                                                                  

Maha Energy AB Announces Filing of Fourth Quarter Report & Live Webcast

Maha Energy AB (publ) (“Maha” or the “Company”) is pleased to announce its Fourth Quarter results.  The report is attached to this press release and available on the Company’s website at www.mahaenergy.ca

Fourth Quarter 2019

• Daily oil & gas production for Q4 2019 averaged 3,165 BOEPD (Q4 2018: 2,454 BOEPD)
• Revenue of USD 13.7 million (Q4 2018: USD 12.6 million)
• Operating netback of USD 9.8 million or USD 35.00 per BOE (Q4 2018: USD 9.4 million or USD 43.26 per BOE)
• EBITDA of USD 8.4 million (Q4 2018: USD 8.5 million)
• Net result of USD 2.7 million (Q4 2018: USD 18.3 million, including USD 12.1 million of one-time other gains)
• Basic Earnings per share of USD 0.03 (Q4 2018: USD 0.19)
• Diluted Earnings per share of USD 0.02 (Q4 2018: USD 0.17)

      
Full Year Ended 31 December 2019

• The Company grew its 2P reserves to 41.8 MMBOE, a 25% increase as compared to year end 2018
• Drilled and completed the Attic well in the Tie Field and drilled a new delineation well (maha-1) in the Tartaruga block currently undergoing well testing.
• Daily oil & gas production for the full year 2019 3,044 BOEPD (2018: 1,804 BOEPD)
• Revenue of USD 55.6 million (2018: USD 38.1 million)
• Operating netback of USD 41.5 million or USD 38.96 per BOE (2018: 26.9 USD million or 41.57 USD per BOE)
• EBITDA of USD 35.9 million (2018: USD 22.4 million)
• Net result for the period of USD 19.7 million (2018: USD 25.6 million, including USD 12.1 million of one-time other gains)
• Basic Earnings per share of USD 0.20 (2018: USD 0.26)
• Diluted Earnings per share of USD 0.18 (2018: USD 0.25)
• Cash and cash equivalents balance of USD 22.4 million (2018: 20.3 million).

      
Financial Summary

Letter to shareholders

Dear Friends and Fellow Shareholders of Maha Energy AB,

The fourth quarter and the end of 2019 marked the beginning of a new era for the Company. Maha is now firmly established as a successful oil producing company with two excellent oil fields in Brazil.  First, the Tie field is rapidly turning into a cash machine with two excellent and predictable oil-producing sandstone reservoirs. Second, the Tartaruga field continues to deliver more oil from the Penedo sandstone. An example is the recently tested 107D horizontal well which flowed 990 BOEPD (939 BOPD & 303 MSCFPD) from the Penedo-1 zone on a restricted jet pump. 

The Company now have a solid foundation to build on. To that extent, Maha staff are slowly turning their attention to further growth opportunities, and in a sector that has suffered greatly since the 2014 oil price collapse, opportunities are abundant. Furthermore, 2019 saw a sharp increase in North American oil company bankruptcies (42) which was the highest since the 2015/16 downturn (114). According to Haynes and Boones Oil Patch Bankruptcy Monitor, 208 North American oil and gas companies have gone bankrupt since the 2014 oil crash. Furthermore, the International Energy Agency (IEA) identifies North America and Brazil as the top two oil and gas growth areas in the world (IEA, “Oil 2019”). It is therefore clear that Maha is not only optimally positioned geographically, but with a very strong balance sheet and ready access to capital, the Company is positioned for growth.

Staying true to color, the Company’s tried and tested strategy of identifying underperforming hydrocarbon assets and then adding state of the art technology to increase value will be continued.

Year on year 2P Reserves up by 25% – now at 39.750 million barrels of oil
In September 2019, the Company announced a significant oil reserve increase in the Tie Field as a result of the recently drilled ‘Attic’ Well. Also, important, and something that perhaps has gone unnoticed, is that the recent high-pressure sand stimulation work performed on the 7TTG well at Tartaruga increased the Proven reserves there by some 30%. The Company’s Proven reserves increased by 18%, year on year. And finally, the Company’s (proven) reserve replacement ratio is 147% for 2019. These numbers are excellent considering they all stem from technology implementation work done on existing and producing oil fields. 

Last hurdle cleared on offtake capacity at Tie field.
After nearly a year of expansion commissioning work and licensing, our biggest customer for the Tie field oil received their final clearance to start refining more oil. Together with the recently added Petrobras operated Comboata receiving station, the Company now have offtake agreements in place to accommodate 4,850 BOPD from the Tie field. This is a significant increase from July 2017 when the Tie Field was purchased and offtake was limited to 1,100 BOPD.

Tartaruga 107D Test Results
The long awaited well test on the Tartaruga 107D horizontal was finally concluded and was better than expected.  Considering that the 107D well was only intermittently ‘coughing’ oil and gas when Maha assumed the field in 2017, it was very encouraging that the well started to flow freely again. This is the whole purpose of horizontal drilling, particularly in ‘tight’ formations like the Penedo. Horizontal drilling adds valuable producible surface area in the well, and it provides for access to previously untapped parts of the reservoir. It was primarily the access to new parts of the reservoir that proved so fortuitous. In tight reservoirs, most of the inflow pressure drop occurs very close to the wellbore, so by drilling a short distance away from the original wellbore it allows for higher reservoir pressure. It is this high reservoir pressure that allows the oil to flow freely to the surface. 

Because the 107D horizontal initially free flowed a mixture of oil, gas and water, it took some time to clean the well up. Over time, the water and oil emulsion reduced enough so that the oil could be treated in the Tartaruga facilities.  Once the well had cleaned up enough, the well could then be placed on pump in order to evaluate the full productivity of the well. And as reported, productivity was more than what the Tartaruga facilities could currently handle. Simply put, the oil could not be trucked out fast enough. 

Work is underway to increase the handling capacity of the Tartaruga facilities so that the oil from the 107D, 7TTG and predictably Maha-1 (to be tested) wells can be produced without restrictions. It is very encouraging that the Penedo sandstone contains so many zones with so much potential and at the moment the field is only producing from the Penedo-1 zone.   No doubt, the added production from Tartaruga is welcomed, but currently, and although it is still early in the new year, the Company is producing in accordance with its’ production plan for 2020.

I continue to be grateful to all Maha employees for their hard work and dedication that has made all this possible.

“Jonas Lindvall” Managing Director

Q4 Webcast

There will be a live webcast today, 28 February at 16:00 CET (Stockholm time) to review and discuss the Fourth Quarter results and provide an operational update. The webcast will be broadcast live on Nyhetsbyrån Direkts Youtube Channel and hosted by Laikas’ Mr. Mats Jonsson and will feature Maha’s CEO Jonas Lindvall and CFO Andres Modarelli. For further details please consult the Company’s website: www.mahaenergy.ca

Adviser

Certified Advisor: FNCA Sweden AB, info@fnca.se, Telephone: +46-8-528 00 399.

For more information, please contact:          

Jonas Lindvall (CEO)
Tel: +1 403 454 7560        
Email: jonas@mahaenergy.ca

or

Andres Modarelli (CFO)
Tel: +1-403-454-7560
Email: andres@mahaenergy.ca

or

Victoria Berg (Investor Relations)
Tel: +46 8 611 05 11          
Email: victoria@mahaenergy.ca

Miscellaneous      

This information is published in accordance with the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact persons set out above on 28 February 2020, at 6:00 am CET.

Maha in Brief

Maha Energy AB is a Swedish public limited liability company. FNCA Sweden AB has been engaged as Certified Adviser. The Company’s auditors are Deloitte. The Company’s predecessor Maha Energy Inc. was founded in 2013 in Calgary, Canada, by Jonas Lindvall and Ron Panchuk. In May 2016, the new group was formed with Maha Energy AB as parent company for purposes completing an initial public offering on the Nasdaq First North Growth Market stock exchange. Jonas Lindvall, CEO and Managing Director, has 26 years of international experience in the oil and gas industry, starting his career with Lundin Oil during the early days of E&P growth.  After 6 years at Shell and Talisman, Jonas joined, and helped secure the success of, Tethys Oil AB. Maha’s strategy is to target and develop underperforming hydrocarbon assets on global basis. The Company operates three oil fields, Tartaruga and Tie in Brazil and LAK Ranch, in Wyoming, U.S. For more information, please visit our website www.mahaenergy.ca.

Important Information

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¹ Q4 2018 Net result includes USD 11.3 million of recognized deferred tax recovery and USD 0.8 million of other gains.