The reader is further cautioned that the preparation of financial statements in accordance with IFRS requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.
MANAGEMENT STRATEGY AND OUTLOOK
The 2013 outlook provides information as to management's expectation for results of operations for 2013. Readers are cautioned that the 2013 outlook may not be appropriate for other purposes. The Company's expected results are sensitive to fluctuations in the business environment and may vary accordingly. This outlook contains forward-looking statements that should be read in conjunction with the Company's disclosure under "Forward-Looking Statements".
2013 Outlook Highlights
-- Production is expected to average between 21,000 Bopd and 24,000 Bopd, a 20% to 37% increase over the 2012 average production;-- Exploration and development spending is budgeted to be $129.0 million excluding acquisitions, a 152% increase from 2012, to be funded from funds flow from operations and cash-on-hand; and-- Funds flow from operations is estimated at $161.0 million, representing an increase of 5% from 2012, using mid-point production guidance and an average oil price assumption of $100.00 per barrel Dated Brent oil price.
2013 Updated Production Outlook
Production for 2013 is expected to average between 21,000 and 24,000 Bopd, representing a 20% to 37% increase over the 2012 average production of 17,496 Bopd. The spread in the estimated production is due to a number of variables outside of the Company's control such as Government approvals relating to the start of South Alamein production, development drilling results in Egypt and the repair of the export pipeline for Block S-1 in Yemen.
Production Forecast 2013 Guidance 2012 Actual % Change----------------------------------------------------------------------------Barrels of oil per day 21,000 -24,000 17,496 20 - 37--------------------------------------------------------------------------------------------------------------------------------------------------------
2013 Updated Funds Flow From Operations Outlook
Funds flow from operations is estimated at $161.0 million ($2.13/share) based on an annual average Dated Brent oil price of $100/Bbl and using the mid-point of the production guidance. Variations in production and commodity prices during 2013 could significantly change this outlook. An increase or decrease in the average Dated Brent oil price of $10/Bbl for the year would result in a corresponding change in anticipated 2013 funds flow by approximately $17.0 million or $0.23/share.
Funds Flow Forecast($ millions) 2013 Guidance 2012 Actual % Change--------------------------------------------------------------------------------------------------------------------------------------------------------Funds Flow from operations 161.0 153.5 5----------------------------------------------------------------------------Brent oil price ($ per bbl) 100.00 111.56 (10)--------------------------------------------------------------------------------------------------------------------------------------------------------2013 Capital Budget($ millions) 2013--------------------------------------------------------------------------------------------------------------------------------------------------------Egypt 124.0Yemen 5.0----------------------------------------------------------------------------Total 129.0--------------------------------------------------------------------------------------------------------------------------------------------------------
