FOR: ANTRIM ENERGY INC.
TSX VENTURE SYMBOL: AEN
AIM SYMBOL: AEY
May 25, 2016
INTERIM FINANCIAL REPORT - FIRST QUARTER 2016
HIGHLIGHTS
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-- Strong cash position, no debt, substantially lower G&A costs and limited
financial commitments moving forward
-- Obtain 100% interest in the highly prospective Skellig Block, Ireland
(subject to finalization and government approval)
-- Continue to evaluate M&A opportunities
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MANAGEMENT'S DISCUSSION AND ANALYSIS
This management's discussion and analysis ("MD&A") provides a detailed explanation of Antrim Energy Inc.'s (the
"Company" or "Antrim") operating results for the three months ended March 31, 2016 compared to the same period
ended March 31, 2015 and should be read in conjunction with the audited consolidated financial statements of
Antrim for the year ended December 31, 2015. This MD&A has been prepared using information available up to May
24, 2016. The interim consolidated financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards ("IFRS"). Unless otherwise noted all amounts are reported in United
States ("US") dollars.
Non-IFRS Measures
Cash flow used in operations and cash flow used in operations per share do not have standard meanings under
IFRS and may not be comparable to those reported by other companies. Antrim utilizes cash flow from operations
to assess operational and financial performance, to allocate capital among alternative projects and to assess
the Company's capacity to fund future capital programs.
Cash flow used in operations is defined as cash flow used in operating activities before changes in working
capital. Cash flow used in operations per share is calculated as cash flow used in operations divided by the
weighted-average number of outstanding shares. Reconciliation of cash flow used in operations to its nearest
measure prescribed by IFRS is provided below.
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Three Months Ended
March 31
($000's) 2016 2015
----------------------------------------------------------------------------
Cash flow used in operating activities (984) 226
Less: change in non-cash working capital 40 (243)
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Cash flow from (used in) operations (1,024) 469
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Excluding foreign exchange gains and losses, cash flow used in operations in the first quarter of 2016 was $0.3
million compared to $0.8 million for the corresponding period in 2015.
Overview of Operations
Corporate
Antrim, with its current cash resources, no debt and no decommissioning obligations, continues to maintain a
strong financial position. Working capital at March 31, 2016 was US$9.2 million, including cash and cash
equivalents of US$9.4 million.
Antrim continues to search for M&A opportunities, using a structured approach in its evaluation. Key criteria
include strategic fit, focus on near term appraisal / development, use of funds, transformative potential with
upside potential for Antrim shareholders and current or near term cash flow. In a period of significant
commodity price volatility, ensuring that the opportunity remains viable in a low oil and gas price environment
is a key component in the evaluation.
In Ireland, the Company has a 100% working interest in Frontier Exploration Licence ("FEL") 1/13, subject to
finalization and government approval of the transfer of Kosmos Energy Ireland's ("Kosmos") interest to Antrim.
Antrim was one of the first companies to realize the oil and gas potential in the southern Porcupine Basin. The
Porcupine Basin is the conjugate basin to the eastern Canadian Orphan Basin/Flemish Pass area, where several
significant oil discoveries have recently been made. Studies of these conjugate margins have demonstrated many
similarities in terms of source rock, maturation, hydrocarbon migration, reservoir characteristics and trap
formation.
The Company has identified two highly prospective Jurassic fault blocks and one Cretaceous submarine fan system
in the FEL 1/13 licence, as well as numerous other leads. To move exploration of FEL 1/13 forward, Antrim is
seeking to extend the first exploration phase of the licence as well as farm-out a portion of its interest in
the licence to a new operator. In February 2016 the first round results of the Ireland 2015 Atlantic Margin
Licensing Round were announced. In total, 14 new licensing options were awarded with successful participants
including Eni, ExxonMobil, Statoil and BP, confirming very strong industry interest in this frontier
exploration play. A second announcement of results from the licensing round is expected in May 2016.
Ireland
Frontier Exploration Licence ("FEL") 1/13, Antrim 100%
In 2013, Kosmos farmed-in to Antrim's Licencing Option over the Skellig Block and acquired 75% interest in and
operatorship of FEL 1/13 in exchange for carrying the full costs of a 3-D seismic programme and re-imbursement
of a portion of Antrim's past exploration costs. Results from the subsequent 3-D seismic reinforced Antrim's
interpretation based on 2-D seismic and strongly indicated the presence of Lower Cretaceous slope fan and
channel deposits similar in geometry and seismic character to many of the recent Cretaceous oil discoveries
offshore West Africa. The licence prospect inventory includes two tilted Jurassic fault blocks and a Cretaceous
submarine fan, as well as several other leads.
In September 2015, Antrim was advised by Kosmos of its intention to withdraw from all of its licence interests
in Ireland to focus on other recent discoveries in their African portfolio. The Company has applied for and
anticipates obtaining at no further cost a 100% working interest in and operatorship of the licence, subject to
finalization and government approval of the transfer of Kosmos interest in FEL 1/13 to Antrim.
FEL 1/13 has a 15 year term, with an initial three-year term followed by three four-year terms. The initial
three-year term expires in early July 2016 and Antrim has submitted a request to extend the first exploration
term by an additional two years pending government approval and agreement on an additional technical work
program. The Company is also currently seeking a new farm-in partner and operator to complete any additional
technical work necessary during the extension period with the ultimate goal that a well commitment could be
made at the end of the revised first exploration phase. In the current commodity price environment the cost of
drilling an exploration well on the licence has decreased considerably from when the licence was first awarded
in 2013. As part of a farm-out transaction Antrim would seek a carry on the first exploration well.
Fyne Licence
P077 Block 21/28a - Fyne, Antrim 100%
United Kingdom (UK) Seaward Licences require licensees to permanently abandon all suspended wells prior to
licence expiry. In the third quarter of 2015 the Company successfully permanently plugged and abandoned three
suspended wells on the Fyne Licence and one suspended well on the Erne Licence in the UK Central North Sea. The
well abandonment campaign was completed as part of a larger abandonment programme allowing Antrim to share
certain common costs offering significant cost savings.
The Company is in discussion with the UK Oil and Gas Authority (OGA), formerly DECC, with respect to
relinquishment and possible reapplication for the licence. The carrying value of the Fyne Licence at March 31,
2016 is $nil (December 31, 2015 - $nil).
Erne Licence
P1875 Block 21/29d - Erne, Antrim 100%
Previous discoveries on the Erne Licence are not commercial on their own, but may be economic to develop as tie-
backs to an adjacent production facility if such a facility were available. Antrim's interest in the Erne
licence increased to 100% after its partner withdrew from the licence following completion of the Erne well
abandonment. The carrying value of the Erne Licence at March 31, 2016 is $nil (December 31, 2015 - $nil).
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Financial Discussion of Operations
Three Months Ended
March 31
($000's except per share amounts) 2016 2015
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Financial Results
Cash flow from (used in) operations (1) (1,024) 469
Cash flow from (used in) operations per share (1) (0.01) 0.00
Net income (loss) (913) 461
Net income (loss) per share - basic (0.00) 0.00
Total assets 11,130 15,784
Working capital 9,234 14,249
Capital expenditures 114 28
Common shares outstanding
End of period 184,731 184,731
Weighted average - basic 184,731 184,731
Weighted average - diluted 184,731 184,731
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(1) Cash flow from operations and cash flow from operations per share are Non-IFRS Measures. Refer to "Non-IFRS
Measures" in Management's Discussion and Analysis.
General and Administrative
General and administrative ("G&A") costs decreased to $0.4 million in the first quarter of 2016 compared to
$0.8 million for the corresponding period in 2015. The decrease in G&A is primarily due to lower salary and
administrative expenses as part of the Company's ongoing efforts to reduce annual G&A.
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A breakdown of G&A expense is as follows:
Three Months Ended
March 31
($000's) 2016 2015
----------------------------------------------------------------------------
Wages and salaries 161 444
Occupancy 75 83
Administrative 183 250
Travel 4 -
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423 777
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Exploration & Evaluation Expenditures
Exploration and evaluation ("E&E") expenditures were a recovery of $16 thousand in the first quarter of 2016
compared to an expense of $14 thousand for the corresponding period in 2015. The recovery relates to previous
exploration expenditures in the UK less licence fees incurred in the current period.
Gain on Disposal of Assets
Gain on disposal of assets in the first quarter of 2016 includes $123 thousand related to an insurance claim
for damaged office equipment. Proceeds from the claim were received in May 2016. Property, plant and equipment
additions in the first quarter of 2016 relate to the acquisition of replacement equipment.
Income Taxes
The Company follows the liability method of accounting for income taxes. As at March 31, 2016, no deferred
income tax assets were recorded due to uncertainty with respect to the ability of Antrim to generate sufficient
taxable income to utilize the unrecognized losses.
Cash Flow and Net Loss from Operations
In the first quarter of 2016 cash flow used in operations was $1.0 million compared to cash flow from
operations of $0.5 million for the corresponding period in 2015. Cash flow used in operations increased due to
a $0.6 million foreign exchange loss in the first quarter of 2016 as a result of a strengthening of in the
value of the Canadian dollar relative to the US dollar. Excluding foreign exchange gains and losses, cash flow
used in operations in the first quarter of 2016 was $0.3 million compared to $0.8 million for the corresponding
period in 2015.
In the first quarter of 2016, Antrim had a net loss of $0.9 million compared to net income of $0.5 million for
the corresponding period in 2015. Net loss increased due to foreign exchange losses in 2016 compared to foreign
exchange gains in 2015.
Foreign Exchange and Other Comprehensive Income (Loss)
The reporting currency of the Company is the US dollar while the Company's operating costs and certain of the
Company's payments in order to maintain property interests are made in the local currency of the jurisdiction
where the applicable property is located. The Company's continuing activities in Canada, Ireland and United
Kingdom are accounted for using the Canadian dollar, Euro and British pound sterling as the functional
currency, respectively. As a result of these factors, fluctuations in these currencies relative to the US
dollar could result in unanticipated fluctuations in the Company's financial results. The Company incurred a
foreign exchange loss of $0.6 million in first quarter of 2016 compared to a gain of $1.2 million for the
corresponding period in 2015.
The Company reported other comprehensive income of $0.7 million in first quarter of 2016, compared to other
comprehensive loss of $1.2 million for the corresponding period in 2015. Other comprehensive income increased
due to foreign currency translation adjustments.
Financial Resources and Liquidity
Antrim had a working capital surplus at March 31, 2016 of $9.2 million compared to a working capital surplus of
$9.6 million as at December 31, 2015. Working capital decreased due to general and administrative expenses
incurred in the period.
Contractual Obligations, Commitments and Contingencies
Antrim has several commitments in respect of its petroleum and natural gas properties and operating leases,
including operating costs, as at March 31, 2016 as follows:
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2016 2017 2018 Thereafter
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Office Leases 248 283 - -
Ireland - - - -
United Kingdom
Fyne - - - -
Erne - - - -
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Total 248 283 - -
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FEL 1/13 in Ireland has a 15 year term, with an initial three-year term followed by three four-year terms. The
initial three year term of the FEL expires in early July 2016 and under the licence terms the work program to
extend the licence into the second term must include the drilling of an exploration well. Antrim has submitted
a request to extend the first exploration term by an additional two years pending government approval and
agreement on an additional technical work program.
Outlook
The Company has been examining various strategic alternatives, including potential business combinations, to
maximize shareholder value. The Company has also been actively engaged in reviewing various options for its
appraised, but undeveloped UK oil and gas assets. No assurance can be provided that from either of these
initiatives a satisfactory opportunity will be identified and if one is identified, that a transaction could be
closed on terms acceptable to the Company.
The Company has submitted an application to extend the first exploration term of its Ireland licence by an
additional two years, pending government approval and agreement on an additional technical work program. The
Company is also seeking a new farm-in partner and operator to complete any additional technical work necessary
during the extension period to further de-risk the identified leads and prospects on the licence. No assurance
can be provided that an extension or farm-out of the Ireland licence can be concluded in a timely manner on
terms acceptable to the Company.
The Company continues to manage its general and administrative expenses, implementing where possible further
cost reductions.
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Summary of
Quarterly
Results
Cash Flow
Provided By Net Income
Revenue, Net (Used In) Net Income (Loss) Per
of Royalties Operations (Loss) Share - Basic
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2016
First quarter - (1,024) (913) (0.00)
------------------------------------------------------------
- (1,024) (913) (0.00)
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2015
Fourth quarter - (164) (169) (0.00)
Third quarter - (2,173) 736 0.00
Second quarter - (1,122) 812 0.00
First quarter - 469 461 0.00
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- (2,990) 1,840 0.01
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2014
Fourth quarter - (815) (903) (0.00)
Third quarter - (109) (528) (0.00)
Second quarter - (2,510) (223) (0.00)
First quarter - (1,179) (8,461) (0.05)
------------------------------------------------------------
- (4,613) (10,115) (0.05)
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Key factors relating to the comparison of net income for the first quarter of 2016 to previous quarters are as
follows:
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-- In the first quarter of 2016, the Company recognized a $0.6 million
foreign exchange loss as a result of an increase in the value of the
Canadian dollar relative to the US dollar;
-- In the third quarter of 2015, the Company recognized a $1.1 million
foreign exchange gain as a result of a significant decrease in the value
of the Canadian dollar relative to the US dollar;
-- In the second quarter of 2015, the Company recognized a $1.7 million
recovery of E&E costs following lower expected decommissioning
obligations associated with signing the OIS contract in June 2015;
-- In the first quarter of 2015, the Company recognized a $1.2 million
foreign exchange gain as a result of a significant decrease in the value
of the Canadian dollar relative to the US dollar;
-- In the fourth quarter of 2014, the Company incurred $0.7 million in
severance to an executive who exercised an option to voluntarily
terminate employment upon closing of the ARNIL sale;
-- In the second quarter of 2014, the Company recognized a $5.2 million
gain on disposal of assets primarily with respect to the recognition in
income of foreign currency translation adjustments previously included
in accumulated other comprehensive income;
-- In the first quarter of 2014, the Company incurred $7.6 million in
finance costs and loss on financial derivative related to the Company's
bank loan and oil hedge obligations;
/T/
Risks and Uncertainties
The oil and gas industry involves a wide range of risks which include but are not limited to the uncertainty of
finding new commercial fields, securing markets for existing reserves, commodity price fluctuations, exchange
and interest rate costs and changes to government regulations, including regulations relating to prices, taxes,
royalties, land tenure, allowable production and environmental protection and access to off-shore production
facilities. The oil and natural gas industry is intensely competitive and the Company competes with a large
number of companies that have greater resources.
Substantial Capital Requirements
The Company's ability to establish reserves in the future will depend not only on its ability to develop its
present properties but also on its ability to select and acquire suitable exploration or producing properties
or prospects. The acquisition and development of properties also requires that sufficient funds, including
funds from outside sources, will be available in a timely manner. The availability of equity or debt financing
is affected by many factors, many of which are outside the control of the Company. World financial market
events and the resultant negative impact on economic conditions, particularly with respect to junior oil and
gas companies, have increased the risk and uncertainty of the availability of equity or debt financing.
Foreign Operations
A number of risks are associated with conducting foreign operations over which the Company has no control,
including currency instability, potential and actual civil disturbances, restriction of funds movement outside
of these countries, changes of laws affecting foreign ownership and existing contracts, environmental
requirements, crude oil and natural gas price and production regulation, royalty rates, OPEC quotas, potential
expropriation of property without fair compensation and retroactive tax changes.
Further discussions regarding the Company's risks and uncertainties, can be found in the Company's Annual
Information Form dated April 22, 2016 which is filed on SEDAR at www.sedar.com.
Forward-Looking and Cautionary Statements
This MD&A contains certain forward-looking statements and forward-looking information which are based on
Antrim's internal reasonable expectations, estimates, projections, assumptions and beliefs as at the date of
such statements or information. Forward-looking statements often, but not always, are identified by the use of
words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "targeting", "forecast", "achieve"
and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be
achieved and other similar expressions. These statements are not guarantees of future performance and involve
known and unknown risks, uncertainties, assumptions and other factors that may cause actual results or events
to differ materially from those anticipated in such forward-looking statements and information. Antrim believes
that the expectations reflected in those forward-looking statements and information are reasonable but no
assurance can be given that these expectations will prove to be correct and such forward-looking statements and
information included in this MD&A should not be unduly relied upon. Such forward-looking statements and
information speak only as of the date of this MD&A and Antrim does not undertake any obligation to publicly
update or revise any forward-looking statements or information, except as required by applicable laws.
This MD&A may contain specific forward-looking statements and information pertaining to Antrim's plans for
exploring and developing its licences, including exploration of the Skellig block, the anticipated increase of
Antrim's working interest in the Skellig block to 100%, potential transactions, commodity prices, foreign
currency exchange rates and interest rates, capital expenditure programs and other expenditures, supply and
demand for oil, NGLs and natural gas, expectations regarding Antrim's ability to raise capital or pursue farm-
out opportunities, to continually add to reserves through acquisitions and development, the schedules and
timing of certain projects, Antrim's strategy for growth, Antrim's future operating and financial results,
treatment under governmental and other regulatory regimes and tax, environmental and other laws.
With respect to forward-looking statements contained in this MD&A, Antrim has made assumptions regarding:
Antrim's ability to obtain additional drilling rigs and other equipment in a timely manner, obtain regulatory
approvals (including for the Skellig block), the consideration received in Antrim's sale of its Causeway asset
will not change materially as a result of post-closing adjustments, the level of future capital expenditure
required to exploit and develop resources and Antrim's reliance on industry partners for the development of
some of its properties, the general stability of the economic and political environment in which Antrim
operates and the future of oil and natural gas pricing. In respect to these assumptions, the reader is
cautioned that assumptions used in the preparation of such information may prove to be incorrect.
Antrim's actual results could differ materially from those anticipated in these forward-looking statements and
information as a result of assumptions proving inaccurate and of both known and unknown risks, including risks
associated with the exploration for and development of oil and natural gas reserves such as the risk that
drilling operations may not be successful, unanticipated delays with respect to the development of Antrim's
properties, operational risks and liabilities that are not covered by insurance, volatility in market prices
for oil, NGLs and natural gas, changes or fluctuations in oil, NGLs and natural gas production levels, changes
in foreign currency exchange rates and interest rates, the ability of Antrim to fund its capital requirements,
Antrim's reliance on industry partners for the development of some of its properties, risks associated with
ensuring title to the Company's properties, liabilities and unexpected events inherent in oil and gas
operations, including geological, technical, drilling and processing problems, the risk that the consideration
from the ARNIL Sale is reduced as a result of post-closing adjustments and the accuracy of oil and gas resource
estimates as they are affected by the Antrim's exploration and development drilling. Additional risks include
the ability to effectively compete for, among other things, capital, acquisitions of reserves, undeveloped
lands and skilled personnel, incorrect assessments of the value of acquisitions, Antrim's success at
acquisition, exploitation and development of reserves, changes in general economic, market and business
conditions in Canada, North America, Ireland, the United Kingdom, Europe and worldwide, actions by governmental
or regulatory authorities including changes in income tax laws or changes in tax laws, royalty rates and
incentive programs relating to the oil and gas industry and more specifically, changes in environmental or
other legislation applicable to Antrim's operations, and Antrim's ability to comply with current and future
environmental and other laws, adverse regulatory rulings, order and decisions and risks associated with the
nature of the Common Shares.
Many of these risk factors, other specific risks, uncertainties and material assumptions are discussed in
further detail throughout this MD&A and in Antrim's Annual Information Form for the year ended December 31,
2015. Readers are specifically referred to the risk factors described in this MD&A under "Risks and
Uncertainties" and in other documents Antrim files from time to time with securities regulatory authorities.
Copies of these documents are available without charge from Antrim or electronically on the internet on
Antrim's SEDAR profile at www.sedar.com. Readers are cautioned that this list of risk factors should not be
construed as exhaustive.
In accordance with AIM guidelines, Mr. Murray Chancellor, C. Eng., MICE and Managing Director, United Kingdom
for Antrim, is the qualified person that has reviewed the technical information contained in this MD&A. Mr.
Chancellor has over 26 years operating experience in the upstream oil and gas industry.
/T/
Antrim Energy Inc.
Condensed Interim Consolidated Balance Sheets
As at March 31, 2016 and December 31, 2015 (unaudited)
(Amounts in US$ thousands)
March 31 December 31
Note 2016 2015
--------------------------
Assets
Current assets
Cash and cash equivalents 9,417 9,895
Restricted cash 11 12
Accounts receivable 150 49
Prepaid expenses 76 107
--------------------------
9,654 10,063
Property, plant and equipment 3 115 6
Exploration and evaluation assets 4 1,361 1,307
--------------------------
11,130 11,376
--------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 420 446
--------------------------
420 446
--------------------------
Shareholders' equity
Share capital 5 361,922 361,922
Contributed surplus 21,932 21,930
Accumulated other comprehensive loss (4,546) (5,237)
Deficit (368,598) (367,685)
--------------------------
10,710 10,930
--------------------------
Total Liabilities and Shareholders' Equity 11,130 11,376
--------------------------
Commitments and contingencies 10
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The accompanying notes are an integral part of the condensed interim consolidated financial statements.
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Antrim Energy Inc.
Condensed Interim Consolidated Statements of Comprehensive Loss
For the three months ended March 31, 2016 and 2015 (unaudited)
(Amounts in US$ thousands, except per share data)
Three Months Ended
March 31
Note 2016 2015
----------------------
Revenue - -
Expenses
General and administrative 8 423 777
Depletion and depreciation 3 10 3
Share-based compensation 6 2 (1)
Exploration and evaluation (16) 14
Loss (gain) on disposal of assets (123) -
Finance and other income (7) (14)
Finance costs 2 8
Foreign exchange loss (gain) 622 (1,248)
----------------------
Income (loss) before income taxes (913) 461
Income tax expense - -
----------------------
Net income (loss) for the period (913) 461
----------------------
Other comprehensive income
Items that may be subsequently reclassified to
profit or loss:
Foreign currency translation adjustment 691 (1,174)
----------------------
Other comprehensive loss for the period 691 (1,174)
----------------------
Comprehensive loss for the period (222) (713)
----------------------
Net income (loss) per common share 7 (0.00) 0.00
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The accompanying notes are an integral part of the condensed interim consolidated financial statements.
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Antrim Energy Inc.
Condensed Interim Consolidated Statements of Cash Flows
For the three months ended March 31, 2016 and 2015 (unaudited)
(Amounts in US$ thousands)
Three Months Ended
March 31
Note 2016 2015
----------------------
Operating Activities
Income (loss) after income taxes (913) 461
Items not involving cash:
Depletion and depreciation 3 10 3
Share-based compensation 6 2 (1)
Accretion of decommissioning obligations - 6
Gain on disposal of assets (123) -
Change in non-cash working capital items 9 40 (243)
----------------------
Cash provided by (used in) operating activities (984) 226
----------------------
Investing Activities
Property, plant and equipment additions (114) -
Exploration and evaluation assets additions - (28)
----------------------
Cash used in investing activities (114) (28)
----------------------
Effects of foreign exchange on cash and cash
equivalents 620 (1,274)
----------------------
Net decrease in cash and cash equivalents (478) (1,076)
Cash and cash equivalents - beginning of period 9,895 15,420
----------------------
Cash and cash equivalents - end of period 9,417 14,344
----------------------
/T/
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
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Antrim Energy Inc.
Condensed Interim Consolidated Statements of Changes in Equity
For the three months ended March 31, 2016 and 2015 (unaudited)
(Amounts in US$ thousands)
Accumulated
Other
Share Contributed Comprehensive
Note Capital Surplus Loss Deficit Total
-----------------------------------------------------
Balance, December
31, 361,922 21,892 (2,837) (369,525) 11,452
2014
Net income for the
period - - - 461 461
Other
comprehensive
loss - - (1,174) - (1,174)
Share-based
compensation 6 - (1) - - (1)
-----------------------------------------------------
Balance, March 31,
2015 361,922 21,891 (4,011) (369,064) 10,738
---------------------------------------------
Balance, December
31, 361,922 21,930 (5,237) (367,685) 10,930
2015
Net loss for the
period - - - (913) (913)
Other
comprehensive
loss - - 691 - 691
Share-based
compensation 6 - 2 - - 2
-----------------------------------------------------
Balance, March 31,
2016 361,922 21,932 (4,546) (368,598) 10,710
-----------------------------------------------------
/T/
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Antrim Energy Inc.
Notes to Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2016 and 2015 (unaudited)
(Amounts in US$ thousands)
1) Nature of Operations
Antrim Energy Inc. ("Antrim" or the "Company") is a Calgary based oil and natural gas company. Through
subsidiaries, the Company conducts exploration activities in Ireland and the United Kingdom. Antrim Energy Inc.
is incorporated and domiciled in Canada. The Company's common shares are listed on the TSX Venture Exchange
("TSXV") and the London AIM market ("AIM") under the symbols "AEN" and "AEY", respectively. The address of its
registered office is 1600, 333 - 7th Avenue S.W, Calgary, Alberta, Canada.
2) Basis of Presentation
a) Statement of compliance
These condensed interim consolidated financial statements for the three months ended March 31, 2016 have been
prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting, and have
been prepared following the same accounting policies as the annual consolidated financial statements for the
year ended December 31, 2015. The condensed interim consolidated financial statements should be read in
conjunction with the annual consolidated financial statements for the year ended December 31, 2015, which have
been prepared in accordance with International Financial Reporting Standards ("IFRS").
The policies applied in these condensed interim consolidated financial statements are based on IFRS issued and
outstanding as at May 24, 2016, the date the Board of Directors approved the interim consolidated financial
statements.
b) Presentation currency
In these condensed interim consolidated financial statements, unless otherwise indicated, all dollar amounts
are expressed in United States ("US") dollars. The Company has adopted the US dollar as its presentation
currency to facilitate a more direct comparison to North American oil and gas companies with international
operations.
c) Critical accounting judgments and key sources of estimation uncertainty
The timely preparation of financial statements requires that management make estimates and assumptions and use
judgment regarding assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled
transactions and events as at the date of the financial statements. Accordingly, actual results may differ from
estimated amounts as future confirming events occur.
Significant estimates and judgments used in the preparation of the financial statements are described in the
Company's consolidated annual financial statements for the year ended December 31, 2015.
d) Changes in accounting policies
The interim consolidated financial statements are prepared on a historical cost basis except as detailed in the
accounting policies disclosed in the Company's consolidated financial statements for the year ended December
31, 2015.
3) Property, plant and equipment
/T/
March 31 December 31
2016 2015
--------------------------
Opening balance 6 18
Additions 114 -
Depletion and depreciation (10) (11)
Foreign currency translation 5 (1)
--------------------------
Closing balance 115 6
--------------------------
4) Exploration and evaluation assets
March 31 December 31
2016 2015
--------------------------
Opening balance 1,307 1,283
Additions - 159
Foreign currency translation 54 (135)
--------------------------
Closing balance 1,361 1,307
--------------------------
/T/
Exploration and evaluation assets at March 31, 2016 and December 31, 2015 relate to the Company's Ireland
Frontier Exploration Licence 1/13 (FEL 1/13). In 2015 the Company's joint venture partner relinquished its
interest in the licence. The Company has submitted an application to extend the first phase of the licence for
an additional two years and is seeking a new joint venture partner to participate in the licence. If the
Company is not able to extend the licence and a qualified joint venture partner is not found to participate in
the licence, the carrying value of the licence may be impaired and the exploration and evaluation costs written
off to net earnings.
/T/
5) Share capital
Authorized
Unlimited number of common voting shares
Common shares issued Number of Amount
Shares $
--------------------------
Balance, March 31, 2016 and December 31, 2015 184,731,076 361,922
--------------------------
/T/
6) Share-based compensation
The Company has a program whereby it may grant options to its directors, officers and employees to purchase up
to 10% of the issued and outstanding number of common shares. The exercise price of each option is no less than
the market price of the Company's stock on the date of grant. Stock option terms are determined by the
Company's Board of Directors but options typically vest evenly over a period of three years from the date of
grant and expire five years after the date of grant.
Share-based compensation for the three months ended March 31, 2016 was $2 (2015 - recovery of $1).
The following table illustrates the number and weighted average exercise prices of and movements in share
options under the option program during the period.
/T/
Three Months Ended Three Months Ended
March 31, 2016 March 31, 2015
---------------------------- ----------------------------
Weighted Weighted
average average
exercise exercise
Number price Cdn $ Number price Cdn $
---------------------------- ----------------------------
Outstanding -
beginning of
period 3,425,000 0.55 5,345,002 0.65
Granted - - - -
Forfeited (170,000) 0.60 (800,002) 0.73
Expired - - (290,000) 1.02
---------------------------- ----------------------------
Outstanding - end
of period 3,255,000 0.55 4,255,000 0.61
---------------------------- ----------------------------
7)Earnings per share
Three Months Ended
March 31
2016 2015
--------------------------
Net income (loss) for the period (913) 461
--------------------------
Basic earnings per share:
Issued common shares 184,731,076 184,731,076
Effect of share options exercised - -
--------------------------
Weighted average number of common shares - basic 184,731,076 184,731,076
--------------------------
Diluted earnings per share:
Weighted average number of common shares - basic 184,731,076 184,731,076
Effect of outstanding options - -
--------------------------
Weighted average number of common shares - diluted 184,731,076 184,731,076
--------------------------
Basic and diluted income (loss) per common share (0.00) 0.00
/T/
There have been no other transactions involving common shares or potential common shares between the reporting
date and the date of completion of these financial statements.
For the periods ended March 31, 2016 and 2015, all stock options were anti-dilutive and were not included in
the diluted common share calculation.
/T/
8) General and administrative expenses
Three Months Ended
March 31
2016 2015
--------------------------
Wages and salaries 161 444
Occupancy 75 83
Administrative 183 250
Travel 4 -
--------------------------
423 777
--------------------------
/T/
9) Supplemental cash flow information
/T/
Three Months Ended
March 31
2016 2015
--------------------------
(Increase)/decrease of assets:
Trade and other receivables 30 54
Inventory and prepaid expenses 36 55
Increase/(decrease) of liabilities:
Trade and other payables (26) (352)
--------------------------
40 (243)
--------------------------
Cash and cash equivalents are comprised of:
Cash in bank 1,417 4,644
Short-term deposits 8,000 9,700
--------------------------
9,417 14,344
/T/
10) Commitments and contingencies
The Company has net commitments in respect of its petroleum and natural gas properties and operating leases,
including operating costs, as at March 31, 2016 as follows:
/T/
2016 2017 2018 Thereafter
----------------------------------------------------------------------------
Office Leases 248 283 - -
Ireland - - - -
United Kingdom
Fyne - - - -
Erne - - - -
----------------------------------------------------------------------------
Total 248 283 - -
----------------------------------------------------------------------------
/T/
FEL 1/13 in Ireland has a 15 year term, with an initial three-year term followed by three four-year terms. The
initial three year term of the FEL expires in early July 2016 and under the licence terms the work program to
extend the licence into the second term must include the drilling of an exploration well. The Company has
submitted a request to extend the first exploration term by an additional two years pending government approval
and agreement on an additional technical work program.
11) Financial instruments and financial risks
Financial instruments
Financial assets and financial liabilities are initially recognized at fair value and are subsequently
accounted for based on their classification. The classification categories, which depend on the purpose for
which the financial instruments were acquired and their characteristics include held-for-trading, available-for-
sale, held-to-maturity, loans and receivables, investments, and other liabilities. Except in very limited
circumstances, the classification is not changed subsequent to initial recognition.
The Company's financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable and
accounts payable. Cash and cash equivalents, restricted cash and accounts receivable are classified as loans
and receivables and are accounted for at amortized cost. Accounts payable are classified as other liabilities
and are accounted for at amortized cost. Due to the short-term maturity of these financial instruments, fair
values approximate carrying amounts.
Financial risks
The Company is exposed to financial risks encountered during the normal course of its business. These
financial risks are composed of credit risk, liquidity risk and market risk including commodity price and
foreign currency exchange risks.
(a) Credit risk
The Company is exposed to the risk that its counterparties will fail to discharge their obligations to the
Company on its cash, cash equivalents, accounts receivable and certain non-current assets.
Cash and cash equivalents and restricted cash are on deposit with reputable Canadian and international banks,
and therefore the Company does not believe these financial instruments are subject to material credit risk.
The extent of the Company's credit risk exposure is identified in the following table:
/T/
March 31 December 31
2016 2015
-------------------------
Cash and cash equivalents 9,417 9,895
Restricted cash 11 12
Accounts receivable 150 49
-------------------------
9,578 9,956
-------------------------
/T/
No accounts receivable are past due or considered impaired.
(b) Liquidity risk
The Company is exposed to liquidity risk from the possibility that it will encounter difficulty meeting its
financial obligations. The Company manages this risk by forecasting cash flows in an effort to identify future
liabilities and arrange financing, if necessary. It may take many years and substantial cash expenditures to
pursue exploration and development activities on all of the Company's existing undeveloped properties.
Accordingly, the Company will need to raise additional funds from outside sources in order to explore and
develop its properties. There is no assurance that adequate funds from debt and equity markets will be
available to the Company in a timely manner.
As at March 31, 2016 the Company's financial liabilities are due within one year.
(c) Market risk
Market risk consists of commodity price risk and foreign currency exchange risk.
Commodity price risk
At March 31, 2016 the Company had no outstanding commodity contracts.
Foreign currency exchange risk
The Company is exposed to fluctuations in foreign currency exchange rates as many of the Company's financial
instruments are denominated in United States dollars, Canadian dollars and British pounds sterling. As a
result, fluctuations in the United States dollar against the Canadian dollar and British pound sterling could
result in unanticipated fluctuations in the Company's financial results. The Company seeks to minimize foreign
exchange risk by holding cash and cash equivalents in United States dollars when not required in support of
current operations.
Capital management
The Company's objective when managing its capital is to safeguard the Company's ability to continue as a going
concern, maintain adequate levels of funding to support its exploration and development program, and provide
flexibility in the future development of its business. The ability of the Company to successfully carry out its
business plan is dependent upon the continued support of its shareholders, attracting joint venture partners,
the discovery of economically recoverable reserves and the ability of the Company to obtain financing to
develop reserves. The Company maintains and adjusts its capital structure based on changes in economic
conditions and the Company's planned requirements. The Company may adjust its capital structure by issuing new
equity and/or debt, selling assets, and controlling capital expenditure programs. The Company intends to fund
its planned capital program through existing cash resources.
The Company's capital structure at March 31, 2016 consisted of cash and cash equivalents and shareholders'
equity. Shareholders' equity includes shareholders' capital, contributed surplus, and accumulated other
comprehensive loss and deficit.
/T/
The capital structure of the Company consists of:
March 31 December 31
2016 2015
--------------------------
Cash and cash equivalents 9,417 9,895
Shareholders' equity 10,710 10,930
/T/
Current restrictions on the availability of credit may limit the Company's ability to access debt or equity
financing for its projects. The Company forecasts cash flows against a range of macroeconomic and financing
market scenarios in an effort to identify future liabilities and arrange financing, if necessary. Although the
Company may need to raise additional funds from outside sources, if available, in order to develop its oil and
gas properties, the Company seeks to maintain flexibility to manage financial commitments on these assets.
Methods employed to adjust the Company's capital structure could include any, all or a combination of the
following activities:
(i) Issue new shares through a public offering or private placement;
(ii) Issue equity linked or convertible debt;
(iii) Raise fixed or floating rate debt;
(iv) Sell or farm-out existing exploration assets.
DIRECTORS
Stephen Greer (1) (3)
Chairman
Erik Mielke (1) (2) (3)
Independent Director
Jim Perry (1) (2) (3) (4)
Independent Director
Anthony Potter
Director
Antrim Energy Inc.
Jay Zammit (2) (4)
Partner,
Burstall Winger Zammit LLP
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Reserves Committee
(4) Member of the Corporate Governance Committee
OFFICERS
Anthony Potter
President, Chief Executive Officer and Chief Financial Officer
Adrian Harvey
Corporate Secretary
STOCK EXCHANGE LISTINGS
TSX Venture Exchange (TSXV): Trading Symbol "AEN"
London Stock Exchange (AIM): Trading Symbol "AEY"
HEAD OFFICE
610, 301 8th Avenue SW
Calgary, Alberta
Canada T2P 1C5
Main: +1 403 264 5111
Fax: + 1 403 264 5113
info@antrimenergy.com
www.antrimenergy.com
The Company's website is not incorporated by reference in and does not form a part of this report.
LONDON OFFICE
Ashbourne House, The Guildway
Old Portsmouth Road, Artington
Guildford, Surrey
United Kingdom GU3 1LR
Main: +44 (0) 1483 307 530
Fax: +44 (0) 1483 307 531
INTERNATIONAL SUBSIDIARIES
Antrim Energy Ltd.
Antrim Exploration (Ireland) Limited
Antrim Energy (UK) Limited
Antrim Energy (Ventures) Limited
LEGAL COUNSEL
Burstall Winger Zammit LLP
Calgary, Alberta
BANKERS
Toronto-Dominion Bank of Canada
AUDITORS
PricewaterhouseCoopers LLP
Calgary, Alberta
INDEPENDENT ENGINEERS
McDaniel & Associates Consultants Ltd.
REGISTRAR AND TRANSFER AGENT
Inquiries regarding change of address, registered shareholdings, stock transfers or lost certificates should be
direct to:
CST Trust Company
Calgary, Alberta
inquiries@cantstockta.com
Copies of the quarterly report are in the process of being despatched to shareholders who have requested a hard
copy and have been posted on the Company's website (www.antrimenergy.com) and on SEDAR (www.sedar.com).
For further information, please contact:
Anthony Potter
President, Chief Executive Officer and Chief Financial Officer
Antrim Energy Inc.
Telephone: + 1 403 264 5111 E-mail: potter@antrimenergy.com
Nominated Advisor
RFC Ambrian Limited
Will Souter or Indra Ruthramoorthy
Telephone: +612 9250 0020
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