ENP Newswire -
Release date- 15082014 -
Unaudited Second Quarter Financial Results
Caza's revenues from oil and natural gas sales increased 489% to
Adjusted EBITDA increased to
Caza's oil and natural gas liquids (NGL) production increased 495% to 65,823 bbls for the three-month period ended
The Company's oil and NGL production has increased to 78% of the Company's combined oil and natural gas production in Q2 2014 from 54% in Q2 2013.
Caza's natural gas production increased 100% to 111,016 Mcf for the three-month period ended
Average net production volumes increased 320% to 937 Boe/d for the three-month period ended
Operating net back increased to
The average oil price received by Caza increased 8% to
The average combined price received by Caza in Q2 2014 increased 1% to
Caza had a cash and cash equivalents balance of
Second Quarter Operational Results and Recent Events
West Copperline Property,
Caza now has four producing wells on this property. The West Copperline 29 Fed #1H and #2H wells are producing from the 2nd Bone Spring Sand, and the West Copperline 29 Fed #3H and #4H wells are producing from the 3rd Bone Spring Sand.
The West Copperline battery has averaged 1,532 Boe/d gross from all four wells, which consists of 1,238 bbls of oil and 1.8 MMcf of natural gas per day during the month of
Gramma Ridge Property,
The market will be updated once production has stabilized and a peak rate has been achieved. The 27-2H well is a direct offset to the highly successful
The market will be updated once the frac has been completed and production has stabilized. The Broadcaster property is contiguous to the Company's West Copperline property, and this well is a direct offset to the Company's operated West Copperline Fed 29 #1H and #3H wells, which have each delivered very strong results. Caza currently has a 25% working interest (17.63% net revenue interest) in the Broadcaster Fed 29 #3H well.
Gramma Ridge Property,
Forehand Ranch Property,
Therefore, the Company decided to drill the first two locations and release the rig while it pursued a permit to drill the more favorable location. The two vertical wells,
The Company has four additional
West Copperline Property,
Forward Drilling Program and Performance against Stated Production Targets
The next scheduled wells to be drilled under the Company's Bone Spring program are anticipated to be as follows: (i) Operated Lennox 32 State Unit #4H (
'Our production increases have led to significant increases in Company revenues and adjusted EBITDA. Company revenues from oil and natural gas sales increased 489% year-on-year and 37% quarter-on-quarter. Our adjusted EBITDA also increased to
'The Company's continued successes in the Bone Spring play and the recent equity infusion have the Company poised for further growth in the second half of 2014, which should continue to generate material value for the Company and our shareholders.'
Copies of the Company's unaudited financial statements for the first quarter ended
Caza is engaged in the acquisition, exploration, development and production of hydrocarbons in the following regions of
In accordance with AIM Rules - Guidance Note for
Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Such information is often, but not always, identified by the use of words such as 'seek', 'anticipate', 'plan', 'schedule', 'continue', 'estimate', 'expect', 'may', 'will', 'project', 'predict', 'potential', 'intend', 'could', 'might', 'should', 'believe', 'develop', 'test', 'anticipation' and similar expressions.
In particular, information regarding production revenue, future drilling or completion operations, production and revenue growth and available sources of financing contained in this news release constitutes forward-looking information within the meaning of securities laws.
Implicit in this information, are assumptions regarding the future budgets and costs, success and timing of drilling operations, rig availability, projected production, revenue and expenses and well performance. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect.
Readers are cautioned that actual future operations, operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general economic, market and business conditions and could differ materially from what is currently expected as set out above.
In addition, the geotechnical analysis and engineering to be conducted in respect of certain wells may not be complete. The flow rates set out herein are not necessarily indicative of long term performance or of ultimate recovery. Future flow rates from wells may vary, perhaps materially, and wells may prove to be technically or economically unviable. Any future flow rates will be subject to the risks and uncertainties set out herein.
For more exhaustive information on these risks and uncertainties you should refer to the Company's most recently filed annual information form which is available at www.sedar.com and the Company's website at www.cazapetro.com. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time except as may be required by securities laws.
The term Adjusted EBITDA consists of net income (loss) plus interest, depreciation, depletion, amortization, accretion, impairment and stock based compensation. Adjusted EBITDA is not defined under International Financial Reporting Standards ('IFRS') and should not be considered in isolation or as an alternative to conventional IFRS measures.
The term boe may be misleading, particularly if used in isolation. A boe conversion of six thousand cubic feet per one barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Basis of Presentation
The Company's common shares are listed for trading on the
The condensed consolidated financial statements (the 'Financial Statements') were prepared in accordance with IAS 34 - Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards ('IFRS').
These Financial Statements should be read in conjunction with the Company's audited annual consolidated financial statements as at and for the year ended
These consolidated financial statements were approved for issuance by the Board of Directors on
Application of new IFRS
IFRIC 21 - Levies was issued by the
Related Party Transactions
Singular participated in the drilling of the Matthys McMillan Gas Unit #2 and the
Under the terms of the agreement of the
All related party transactions are in the normal course of operations and have been measured at the agreed to exchange amounts, which is the amount of consideration established and agreed to by the related parties and which is comparable to those negotiated with third parties
The Company holds various forms of financial instruments. The nature of these instruments and the Company's operations expose the Company to commodity price, credit, and foreign exchange risks. The Company manages its exposure to these risks by operating in a manner that minimizes its exposure to the extent practical. Except as noted below there have been no changes in the Company's risks, or the objectives, policies and processes to manage these risks.
Commodity Price Risk
The Company is subject to commodity price risk for the sale of natural gas. The Company may enter into contracts for risk management purposes only, in order to protect a portion of its future cash flow from the volatility of natural gas and natural gas liquids commodity prices.
These agreements cover 93,782 barrels of oil at a swap price of
The fair value of these assets at a particular point in time is affected by underlying commodity prices, expected commodity price volatility and the duration of the contract and is determined by the expected future settlements of the underlying commodity. The gain or loss on such contracts is made up of two components; the realized component, which reflects actual settlements that occurred during the period, and the unrealized component, which represents the change in the fair value of the contracts during the period.
For the three month period ended
Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the consolidated statement of financial position date.
A majority of the Company's financial assets at the consolidated statement of financial position date arise from natural gas liquids and natural gas sales and the Company's accounts receivable that are with these customers and joint venture participants in the oil & natural gas industry. Industry standard dictates that commodity sales are settled on the 25th day of the month following the month of production.
The Company's natural gas and condensate production is sold to large marketing companies. Typically, the Company's maximum credit exposure to customers is revenue from two months of sales. During the six month period ended
In addition, when joint operations are conducted on behalf of a joint interest partner relating to capital expenditures, costs of such operations are paid for in advance to the Company by way of a cash call to the partner of the operation being conducted.
Caza management assesses quarterly whether there should be any impairment of the financial assets of the Company. At
These outstanding amounts due from certain joint interest partners were received by the Company on
Trade receivables disclosed above include amounts that are past due at the end of the reporting period for which the Group has not recognized an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts (which include interest accrued after the receivable is more than 60 days outstanding) are still considered recoverable.
The Company manages exposure on cash balances by holding cash with large and reputable financial institutions. The Company also assesses the credit worthiness of each counterparty before entering into contracts and ensures that the counterparties meet minimum credit quality requirements.
The Company entered into an Equity Adjustment Agreement (the 'Adjustment Agreement') on
Pursuant to the Adjustment Agreement, during the three months ended
Under the terms of the Adjustment Agreement, if on
The fair value of this derivative was calculated using Monte-Carlo Simulation at the date of issuance using inputs as of that date and at
The fair value of the derivative asset amounted to
Notes Payable - Apollo
The Company entered into a Note Purchase Agreement ( the 'Note Agreement') dated
The outstanding balance of the Tranche A Apollo Note as at
The Company is required to comply with financial covenants, which are tested quarterly, providing for specified interest coverage ratios beginning in the quarter ending
Notes Payable - Yorkville
In connection with the Loan, the Company incurred a total of
The Loan bears interest on outstanding principal at 8% per annum and interest is payable quarterly only in Common Shares based on a conversion price equal to 92.5% of the average price of the Common Shares during the ten trading days prior to the interest payment date.
At Yorkville's option, outstanding principle of the loan is convertible into Common Shares of the Company and the conversion price will be a price per Common Share equal to either (a) 92.5% of the average price of the Common Shares during the ten trading days prior to the conversion to a maximum of
The outstanding balance of the Loan as at
Long-term Incentive Plan
Performance awards are payable after the end of each year, based on a specified percentage of each participant's salary determined by the amount of the total shareholder return of the Company during each measurement period compared to the total shareholder return of 10 companies designated in a peer group.
Subject to the discretion of the Board of Directors, performance awards are payable one-half in cash and one-half in common shares. Compensation expense resulting from the Performance Program will be accrued over the term of each measurement period beginning in the quarter ended
Accrued compensation expense related to the three measurement periods for the quarter ended
The Board of Directors has reserved for issuance an aggregate of 4,289,608 common shares in connection with outstanding performance awards during the three-year performance program, based on the Company's attaining the midpoint of the payout performance range. The number of common shares actually issued may be more or less than 4,289,608 common shares.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following Management's Discussion and Analysis ('MD&A') of the financial results for
FORWARD LOOKING INFORMATION
In addition to historical information, the MD&A contains forward-looking statements that are generally identifiable as any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events of performance (often, but not always, through the use of words or phrases such as 'will', 'may', 'will likely result,', 'should', 'expected,' 'is anticipated,' 'believes,' 'estimated,' 'intends,' 'plans,' 'projection' and 'outlook'), are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements.
These statements are based on certain factors and assumptions regarding the results of operations, the performance of projected activities and business opportunities. Specifically, we have used historical knowledge and current industry trends to project budgeted expenditures for 2014. While we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.
Actual results achieved will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors.
Such factors include, but are not limited to: risks associated with the Company's stage of development; competitive conditions; share price volatility; risks associated with crude oil and natural gas exploration and development; risks related to the inherent uncertainty of reserves and resources estimates; possible imperfections in title to properties; the volatility of crude oil and natural gas prices and markets; environmental regulation and associated risks; loss of key personnel; operating and insurance risks; the inability to add reserves; risks associated with industry conditions; the ability to obtain additional financing on acceptable terms if at all; non operator activities; the inability of investors in certain jurisdictions to bring actions to enforce judgments; equipment unavailability; potential conflicts of interest; risks related to operations through subsidiaries; risks related to foreign operations; currency exchange rate risks and other factors, many of which are beyond the control of the Company.
Accordingly, there is no representation by Caza that actual results achieved during the forecast period will be the same in whole or in part as that forecast. Further, Caza undertakes no obligation to update or revise any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by applicable securities laws.
Financial outlook information contained in this MD&A about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this MD&A should not be used for purposes other than for which it is disclosed herein.
The financial data presented herein has been prepared in accordance with IFRS. The Company has also used certain measures of financial reporting that are commonly used as benchmarks within the oil and natural gas production industry in the following MD&A discussion.
The measures are widely accepted measures of performance and value within the industry, and are used by investors and analysts to compare and evaluate oil and natural gas exploration and producing entities. Most notably, these measures include 'operating netback', 'funds flow from (used in) operations' and 'Adjusted EBITDA'.
Operating netback is a benchmark used in the crude oil and natural gas industry to measure the contribution of oil and natural gas sales and is calculated by deducting royalties and operating expenses from revenues. Funds flow from (used in) operations is cash flow from operating activities before changes in non-cash working capital, and is used to analyze operations, performance and liquidity.
The term Adjusted EBITDA consists of net income (loss) plus interest, depreciation, depletion, amortization, accretion, impairment and stock based compensation. The Company has included Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates.
These measures are not defined under IFRS and should not be considered in isolation or as an alternative to conventional IFRS measures. These measures and their underlying calculations are not necessarily comparable or calculated in an identical manner to a similarly titled measure of another entity. When these measures are used, they are defined as 'Non IFRS' and should be given careful consideration by the reader.
NOTE REGARDING BOES AND MCFES
In this MD&A, barrels of oil equivalent ('boe') are derived by converting gas to oil in the ratio of six thousand cubic feet ('Mcf') of gas to one barrel ('bbl') of oil (6 Mcf: 1 bbl) and one thousand cubic feet of gas equivalent ('Mcfes') are derived by converting oil to gas in the ratio of one bbl of oil to six Mcf (1 bbl: 6 Mcf). Boes and Mcfes may be misleading, particularly if used in isolation.
A boe conversion of 6 Mcf of natural gas to 1 bbl of oil, or a Mcfe conversion ratio of 1 bbl of oil to 6 Mcf of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
References to 'dollars' and '$' are to U.S. dollars and references to 'CDN$' are to Canadian dollars.
STRATEGY AND ASSETS
The Company's strategy is to achieve significant growth in reserves and production through:
progressing material, internally generated prospects, utilizing cash flows from existing production and exploiting Proven plus Probable reserves and
executing strategic acquisitions of assets at all stages of the development cycle to facilitate longer term organic growth.
In the implementation of this strategy, the Company has a clear set of criteria in high-grading projects:
the Company seeks to retain control of project execution and timing through the operatorship of assets;
assets should be close to existing established infrastructure, allowing for quick, efficient hook-up and lower operational execution risk;
drilling targets in close proximity to known producing reservoirs and
internal models for core projects should demonstrate the ability to deliver at least a 25% rate-of-return on investment.
The Company is primarily focused in the
This provides the Company with low-risk, liquids-rich development opportunities from many geologic reservoirs and play types. The basin also has a vast operational infrastructure in place. The Company is utilizing recent advances in horizontal drilling and dynamic completion technologies to unlock the significant resources within its asset base and the region.
Management has focused efforts on building a core asset base in the prolific Bone Spring play and has concluded that these assets represent the most significant opportunity for the Company to deliver material production, revenue growth and demonstrable shareholder returns within an acceptable timeframe. The Company expects that expanding and diversifying the producing asset base within the
The Company now has approximately 300 drilling locations plus 24 (7.31 net) producing wells in the Bone Spring play. Management believes that the Company is well-positioned with approximately 4,800 net acres in the play and continues to actively monitor opportunities to build on Caza's current acreage position.
The Company's Bone Spring leases are mostly State and Federal leases with primary terms between 5-10 years. In terms of obligations and commitments, one producing well will hold each lease in its entirety.
Subject to the availability of appropriate financing, the Company's objective is to embark on an accelerated and expanded drilling program in the Bone Spring play over the next two years. Management believes that such a program has the potential to increase shareholder value significantly over the period. A program of this type will require additional financing and would utilize excess operational cash flow to fund further development drilling and lease purchases beyond the initial two year period.
Management believes that such a program can be accomplished by exploiting the Company's existing asset/lease inventory. However, if appropriate, Management will also seek to identify corporate and asset acquisitions, which will enable the Company to increase its position in the Bone Spring play.
Accordingly, in line with the Company's stated strategy, Management's goal is to achieve significant growth in the Company's reserves and production, thereby raising the Company's profile in the basin and allowing shareholder value to be maximized and, if appropriate, fully matured over the short-to-medium term.
Natural gas, natural gas liquids and crude oil revenues increased 489% to
Average daily production increased by 320% to 937 boe/d in the second quarter of 2014 from 223 boe/d in the same period in 2013. The increase was mainly due to additional wells coming on line from the drilling program in the New Mexico Bone Spring play. Natural gas production made up 22% of Caza's production during the three month period ended
This is compared to a total production profile comprised of 46% natural gas production for the same period in 2013. Caza's production volumes increased 315% to 84,325 boe for the three-month period ended
Our future revenue and production volumes will be directly affected by North American natural gas prices, West Texas Intermediate crude oil prices and natural gas liquid prices, the performance of existing wells, drilling success and the timing of the tie-in of wells into gathering systems.
Severance tax is a tax imposed by states on natural resources such as crude oil, natural gas and condensate extracted from the ground. The tax is calculated by applying a rate to the dollar amount of production from the property or a set dollar amount applied to the volumes produced from the property.
Severance taxes and transportation expenses totaled
Production expenses for the three-month period ended
Depletion, Depreciation, Amortization and Accretion
Depletion, depreciation, amortization and accretion expense for the three-month period ended
The decreased depletion expense on a per boe basis for the period ended
Costs of unproved properties of
Accretion expense is the increase in the present value of the asset retirement obligation for the current period and the amount of this expense will increase commensurate with the asset retirement obligation as new wells are drilled or acquired through acquisitions.
General and Administrative Expenses
Net general and administrative expenses for the second quarter 2014 decreased by 5% to
Stock-based compensation expense in the amount of
Gain (Loss) on Risk Management Contracts
The Company has entered into commodity price derivative contracts to limit exposure to declining crude oil prices in accordance with its covenants under the Note Purchase Agreement.
All derivative contracts are approved by management before the Company enters into them. The Company's risk management strategy is dictated in part by covenants in the Note Purchase Agreement (as defined herein) which require the Company to hedge approximately 75% of its production. The contracts limit exposure to declining commodity prices, thereby protecting project economics and providing increased stability of cash flows and for capital expenditure programs.
Under these contracts, the Company receives or pays monthly a cash settlement on the covered production of the difference between the swap price specified in the applicable contract and the month average of the daily closing quoted spot price per barrel of West Texas Intermediate NYMEX crude oil.
These agreements cover 93,782 barrels of oil at a swap price of
The fair value of the Company's commodity price derivative contracts represents the estimated amount that would be received for settling the outstanding contracts on
The gain or loss on such contracts is made up of two components; the realized component, which reflects actual settlements that occurred during the period, and the unrealized component, which represents the change in the fair value of the contracts during the period.
For the three month period ended
Caza incurred a net loss of
Interest income for the three-month period ended
Outstanding Share Data
Caza is authorized to issue an unlimited number of common shares without par value. Holders of common shares are entitled to one vote per share on all matters voted on a poll by shareholders, and are entitled to receive dividends when and if declared by the board of directors out of funds legally available for the payment of dividends.
Upon Caza's liquidation or winding up or other distribution of its assets among its shareholders for the purpose of winding up its affairs, holders of common shares are entitled to share pro rata in any assets available for distribution to shareholders after payment of all obligations of the Company. Holders of common shares do not have any cumulative voting rights or pre-emptive rights to subscribe for any additional common shares.
Liquidity and Capital Resources
Caza's 2014 operating plan calls for participation in ten to twelve wells funded from production revenues, existing cash resources and available financing under the Note Purchase Agreement or the SEDA (each as defined below). In the event additional sources of financing become available, the Company would consider increases to its drilling program.
The Company is focused on securing appropriate levels of capitalization to support its business strategy. As commodity prices or production fluctuate or as other circumstances dictate, the Company may alter its capital program or reduce costs in order to maintain an acceptable level of capitalization.
Caza and its subsidiary
The Company has arranged for funding under the following agreements:
Note Purchase Agreement
Under the Note Purchase Agreement, as amended, the Company is required to comply with financial covenants, which are tested quarterly, providing for specified interest coverage ratios beginning in the quarter ending
As a result the Company complied with such ratio as at
The Note Agreement provides for customary events of default. Additionally, an event of default would occur upon a change of control of the Company, which consists of (i) a shareholder acquiring more than 35% of the Company's outstanding common shares, (ii) a change in the composition of the board of directors by more than 1/3 during a 12-month period or (iii) a termination of service by any three of the five executive officers of the Company. Outstanding balances under the Notes are secured by first-priority security interests in all of the Company's assets.
In addition to a 2% overriding royalty interest conveyed at the closing of the Note Agreement in its properties in
Upon full repayment of the Notes, the overriding royalty interests will convert to a 25% net profits interest in each property, proportionately reduced to reflect the Company's working interest as provided in the Note Agreement, which will reduce to a 12 1/2% net profits interest at such time as the Note Holder achieves specified investment criteria pursuant to the Note Agreement.
During 2013 and through the period ended
The outstanding balance of the Notes as at
In connection with the sale of the Notes, the Company incurred a total of
Standby Equity Distribution Agreement
The Company and Yorkville are party to a
Equity Adjustment Agreement
The Company entered into an Equity Adjustment Agreement (the 'Adjustment Agreement') on
Transactions with Related Parties
All related party transactions are in the normal course of operations and have been measured at the agreed to exchange amounts, which is the amount of consideration established and agreed to by the related parties and which is comparable to those negotiated with third parties.
This participation was in the normal course of Caza's business and on the same terms and conditions to those of other joint venture partners. Singular is a related party as it is a company under common control with
Factors that have caused variations over the quarters:
Revenues and operating netback (Non-IFRS) has generally increased as a result of the Company's increased oil production.
During 2013 and through the period ended
Capital expenditures increased during the second half of 2013 and the first quarter of 2014 as the Company deployed capital made available under the Note Purchase Agreement and other funding arrangements.
The Company holds various forms of financial instruments. The nature of these instruments and the Company's operations expose the Company to commodity price, credit, share price and foreign exchange risks. The Company manages its exposure to these risks by operating in a manner that minimizes its exposure to the extent practical.
Critical Accounting Estimates
The policies discussed below are considered particularly important as they require management to make informed judgments, some of which may relate to matters that are inherently uncertain. The financial statements have been prepared in accordance with Canadian IFRS. In preparing financial statements, management makes certain assumptions, judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses.
The basis for these estimates is historical experience and various other assumptions that management believes to be reasonable. Actual results could differ from the estimates under different assumptions or conditions.
Reserves - The Company engages independent qualified reserve evaluators to evaluate its reserves each year. Reserve determinations involve forecasts based on property performance, future prices, future production and the timing of expenditures; all these are subject to uncertainty. Reserve estimates have a significant impact on reported financial results as they are the basis for the calculation of depreciation and depletion. Revisions can change reported depletion and depreciation and earnings; downward revisions could result in a ceiling test write down.
Decommissioning Liabilities - The Company provides for the estimated abandonment costs using a fair value method based on cost estimates determined under current legislative requirements and industry practice. The amount of the liability is affected by the estimated cost per well, the timing of the expenditures and the discount factor used. These estimates will change and the revisions will impact future accretion, depletion and depreciation rates.
Income taxes - The utilization of future tax assets subject to an expiry date are based on estimates of future cash flows and profitability. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes of estimates in future periods could be significant.
Stock based Compensation - The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. This model is used to value the stock options granted. In addition, option pricing models require the input of highly subjective assumptions including the expected stock price volatility. Changes in the subjective input assumptions can materially affect the fair value estimates as reflected in the consolidated financial statements
Critical Accounting Estimates
Certain of our accounting policies require that we make appropriate decisions with respect to the formulation of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. For a discussion about those accounting policies, please refer to our annual management's discussion and analysis and Note 2 of the corresponding audited consolidated financial statements for the year ended
Recent Accounting Pronouncements
The Company has assessed new and revised accounting pronouncements that have been issued that are not yet effective and determined that the following may have a significant impact on the Company
Each of the additional new standards outlined below is effective for annual periods beginning on or after
There were no changes to the consolidated financial statements or the consolidation process as a result of adoption of IFRS 10. IFRS 11 classifies interests in joint arrangements as joint ventures or joint operations depending on the rights and obligations of the parties in the arrangement.
Caza performed a review of interests in joint arrangements and concluded that shared wells operate as joint operations and accordingly there is no change in the accounting for these assets as a result of adoption of this standard. As a result, there were no changes as a result of the adoption of IFRS 12 as well.
Furthermore Caza was also required to adopt IFRS 13 'Fair Value Measurements,' amendments to IAS 1 'Presentation of Financial Statements,' amendments to IFRS 7 'Financial Instruments: Disclosures.' There were no material changes as a result of the adoption of these standards.
The Company will also continue to monitor standards development as issued by the IASB and the AcSB as well as regulatory developments as issued by the CSA, which may affect the timing, nature or disclosure of its adoption of IFRS.
For a discussion about risk and uncertainties, please refer to our Management's Discussion and Analysis and Annual Information Form for the year ended
INTERNAL CONTROL OVER FINANCIAL REPORTING
The Chief Executive Officer and the Chief Financial Officer are responsible for establishing and maintaining internal control over financial reporting (ICFR), as such term is defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for Caza.
They have designed ICFR, or caused it to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. There were no changes in our ICFR during the period beginning on
It should be noted that a control system, including the Company's disclosure and internal controls and procedures, no matter how well conceived can provide only reasonable, but not absolute assurance that the objectives of the control system will be met and it should not be expected that the disclosure and internal controls and procedures will prevent all errors or fraud.
Further information regarding the Company, including its Annual Information Form, can be accessed under the Company's public filings found at http://www.sedar.com and on the Company's website at www.cazapetro.com.
Tel: +1 432 682 7424
Tel: +65 9731 7471
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