ShaMaran Petroleum (SNM) Q3 2024 earnings summary

Executive summary

• Closed Atrush Acquisition on August 6, 2024, increasing working interest in Atrush Block from 27.6% to 50% and securing a bargain purchase gain of $70.3 million.

• Amended bond terms effective July 1, 2024, extending maturity to July 2027 and introducing a quarterly cash sweep mechanism.

• Q3 2024 revenue rose 133% year-over-year to $29.4 million, driven by increased local oil sales and higher production from both Atrush and Sarsang.

• The Iraq-Türkiye pipeline (ITP) closure since March 2023 continues to materially impact operations, with all oil sold to the local market at discounted prices.

• Reviewing further consolidation opportunities in Kurdistan and aiming for export pipeline restart.

Financial highlights

• Q3 2024 gross margin on oil sales was $10 million, up 525% from Q3 2023.

• EBITDAX for Q3 2024 reached $21.5 million, up from $5.8 million in Q3 2023.

• Free cash flow before debt service in Q3 2024 was $21.6 million, more than double the prior year.

• Operating cash flow in Q3 2024 was $29.1 million, 122% higher than Q3 2023.

• Revenue for the first nine months of 2024 was $74.6 million, a 19% increase year-over-year.

Outlook and guidance

• Sarsang production expected to increase in Q4 2024 due to ongoing drilling and improved facility uptime.

• Local sales are expected to continue until ITP exports resume, but timing remains uncertain.

• Focus remains on deleveraging and cost control while seeking commercial solutions for export resumption.