Published On: Wed, Nov 21st, 2012

Horn Petroleum Third Quarter 2012 Results

VANCOUVER, BRITISH COLUMBIA–(Marketwire – Nov. 20, 2012) – Horn Petroleum Corporation (TSX VENTURE:HRN) (“Horn” or the “Company”) is pleased to announce its results for the third quarter of 2012.

During the nine months ended September 30, 2012, Horn increased its investment in intangible exploration assets by $30.0 million. The majority of the costs incurred during 2012 related to drilling the Shabeel-1 and Shabeel North-1 exploration wells in the Dharoor Valley block. The remaining expenditures are PSA related expenditures and general and administrative costs. The Company and its Partners fulfilled the initial exploration period work commitments under the Dharoor Valley and Nugaal Valley PSAs with the drilling of the Shabeel wells.

While the Company was disappointed that the first two exploration wells in Puntland (Somalia) did not flow oil, the Company remains highly encouraged that all of the critical elements exist for oil accumulations. Horn recently completed demobilization of the drilling rig and associated equipment and both well sites have been restored to original condition.

Horn and its partners have entered into the next exploration period in both the Dharoor Valley and Nugaal Valley PSAs which each carry a commitment to drill one exploration well in each block by October 2015.
Efforts are now focused on making preparations for a seismic acquisition campaign in the Dharoor PSA which will include a regional seismic reconnaissance grid in the previously unexplored eastern portion of the basin as well as prospect specific seismic to delineate a drilling candidate in the western portion of the basin where an active petroleum system was confirmed by the recent drilling at the Shabeel-1 and Shabeel North-1 locations.

Operating expenses of $0.5 million were recorded during the third quarter of 2012 ($1.6 million during the nine months ended September 30, 2012). These were offset by finance income of $23.0 million during the third quarter of 2012 ($9.0 million during the nine months ended September 30, 2012). Finance income primarily relates to fair market value adjustments of the Company’s warrant liabilities. These fair market value adjustments are performed as the Company has an obligation to issue shares for a price (denominated in Canadian dollars) that is not fixed in the Company’s functional currency (United States dollars).

As at September 30, 2012, the Company had cash of $16.1 million and working capital of $12.4 million as compared to cash of $27.6 million and working capital of $25.9 million at December 31, 2011. The Company’s liquidity and capital resource position has been reduced during 2012 primarily due to expenditures incurred on the drilling of the Shabeel-1 and Shabeel North-1 exploration wells offset partially by the non-brokered private placement which raised CAD$15.0 million in June 2012.

Horn continues to investigate potential joint venture partnerships and also is reviewing new venture opportunities in the region.

The Board has approved granting 2,820,000 incentive stock options to certain directors, officers and other eligible persons of the Company. The options will have a three year term, vesting provisions consistent with the existing outstanding options, and will be priced at $0.32 per share (or the closing price on November 21, 2012 if higher).

Horn President and CEO, David Grellman, commented, “We remain very encouraged by the exploration potential of our Jurassic rift basins in Puntland. We have committed to the next exploration phase in both PSAs and plan to aggressively explore both areas to confirm this potential. We are also optimistic that the political progress in Somalia will continue and allow oil and gas exploration in the region to expand.”
Horn holds a 60% working interest in the Dharoor and Nugaal Valley blocks and is the operator. The other partners in the blocks are Range Resources (20%) and Red Emperor (20%). Africa Oil Corporation holds an approximate 45% equity interest in Horn.

Horn Petroleum Corporation is a Canadian oil and gas company with assets in Puntland, Somalia. The Corporation holds a 60% interest and operatorship in the Dharoor and Nugaal blocks encompassing a Jurassic Rift Basin on trend and analogous to the large oil fields in Yemen. The Corporation’s shares are listed on the TSX Venture Exchange under the symbol “HRN”.


David Grellman, President and CEO

Displaying 19 Comments
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  1. Kayse says:

    This is worrying news for investors as well as for the local people who had hopes of finding oil. If I was one of the investors I would withdraw and sale my shares as fast as possible because its clear the company went through carelessly more than 50percent of its working capital in just nine months.

    They will burn the remaining $12.4 in no time while achieving nothing and investors will be forced to cough up some more cash. No dividends for another three years. This will also be complicated by the unfolding political uncertainties in the region in which HRN failed to foresee and share with its investors.

    Overall this is very disappoint result, I have not seen an exploration that burn cash that fast with only saline water in return. The only option for investors is to withdraw. The company needs not only money for seismic programmes, explorations, security, bribing but also money to hire expensive lawyers because the Federal government in Mogadishu will ensure the deal never takes off and no oil leaves Somali soil without its cut and blessing.

    Very amateur company.

    • Kayse says:

      Its clear both Ranges and Red outsmarted the inexperienced company by giving them 60pc risk while they each took only 20pc chance. HRN burnt $8.1 million while Range and Red each lost $2.7 million. HRN only has $7.44 million to gamble with another block…if this drill produces nothing in 2015, HRN will be bankrupt.

    • jama says:

      In reality there's oil in dharoor without doubt companies don't invest empty place specailly oil companies as they said "short Pain long gain" most corporate experience this. Horn pertroleum will keep drilling until 2015 by that time somalia will become stable country with few semi-autonomous states than Horn petroleum will declare oil found in dharoor.

      Horn petroleum they are just waiting peacful stable somalia after that sharing process will start.mogadishu have no power nor the will to block this sort of projects.

  2. Abdiwahab says:

    somaliland's oil will never be used by anyone else apart from ourselves ok

    • libbaan Dir says:

      if they find oil in Southern Somalia Somaliland will get 50%, why? because we are the same people, but i wouldn't give anything to the Pugland traitors

  3. mohamed cheers says:

    Dharoor valley block? Aint this within the Somaliland Demarcation Colonial Boundaries?
    How come Puntland Mudug Somalia Region claims Nugaal Dharoor Valley of Sanaag
    Somaliland province? Some Oil Company dirty politics are in display in this report and more
    clarification is appreciated?

    • Abdi2 says:

      This is a huge geographical area some of which comes under Somaliland Border and another under Somalia Border (puntland). These companies are knowledgable about the borders and avoid the Somaliland territories ever since they were given initial warnings during their explorasion activities and in meetings with them in South Africa.

    • amal says:

      I think part of it comes under puntland and the other part under Somaliland.

  4. Irir Samaale says:

    To be in the oil market these days you need to be a company that would invest 100's of millions or even
    billions and still be big enough to write it off and not 10's of millions and risk bankruptcy.

    It seems that this company saw this region as its rainbow to its riches

  5. Ahmed says:

    Kayse has a comment on every thing, even on nuclear science. Is there any thing that he doesnt know i wonder? . The jungle intelectual runs SL press i guess or is major share holder .

  6. PuntlandGeezer(PIS) says:

    I just hope they can find oil in somalia our people are dying everywhere. Those kenyan bantus are looting our properties in Nairobi, the aids infected habesha rats are burning our houses & raping our sisters in dhagaxbuur & our brother in hargeisa are be used and manipulated by our enemies.
    As soon as we found oil we should attack ethiopia and liberate somali galbeed.
    I am a warrior not a stooge I don't believe in white trash colonial fake borders. somaliwayne will never die and those stooges who sell their somaalino for a british white trash fake border should be ashamed of themselves.

    • cimraan says:

      Cry baby cry………… it is good for your sool. I feel yo pain.

    • Bankai says:

      warya adiga wa walantahay, why should we ask for more trouble if we get oil.?

      • Buuxiye says:

        I don't believe Majeerteen are 100% Somali.

        It is not possible for MJ to count 46 to Abdulrahmaan Jaberti while all others only count 28-32. Mathematical impossibility.

        Majerteen a mix of different people from Zanzibaris, Sudanis, Jaberti Eritreans, Yemenis, Midgaans and Oroma.

        In 1977 it was MJ who attacked the Government of Somalia after a long bitter war with Ethiopia. MJ abused the trust and loyalty of the Somali military forces and stabbed the NATION in the back.

        We all know why Siyad Barre became paranoid and started killing different clans.
        We all know who assassinated the Last ELECTED President of Somali-Republic.
        We know who brought 70,000 Ethiopians into somali soil.

        Who is an agent of Ethiopia? Who sells Ogadeen business men from Bossasso for a few dollars?

  7. Mohamud Musa says:

    Savage people always call stooges to those who think cleverly. It’s hard to share the same identity with those ignorants, whose their principle mottos is war only, without prior thinking of its consequence.

  8. Buuxiye says:

    Unless Puntland is aiming on SELLING Brackish water for $80 a Barrel there i no chance of Oil finds in Pirateland.

    Unless the pirates hijack an oil Tanker and bury the oil under Gerowe :) Muhahaha

    I am concerned about the Saracen trained mercenaries who are now guns for Hire, these men have been desensitized to a level where there is 99% probability of the NEXT LEADER of Shabab being a member of the Puntland Marine forces.

    The seeds of future terror groups have once again been sown in the puntland province of Somalia just as it was the case in 1993 when Dahir Aweys & Fuad Shangoole constituted their draft extremist organisation Al-Itihaad.

    The prospective next terror group from Puntland will be better trained and better equipped in causing total global outrage in the not so distant future. With Moqadishu still at the mercy of the Amisom fleets(10-20years to come) the only hope of preventing this future threat lies with enabling Somaliland and it's state apparatus it's deserved right of self preservation.

    Prevention is better then cure and only Somaliland can prevent the chaos to come!

  9. Hoodo says:

    Your is what I missed

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