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CAMAC Energy Inc. (NYSEMKT:CAK)

Q4 2013 Results Earnings Conference Call

March 13, 2014, 10:00 AM ET

Executives

Christopher D. Heath - Director, Corporate Finance and Investor Relations

Kase L. Lawal - Chairman & CEO

Segun Omidele - SVP, Exploration & Production

Earl McNiel - CFO and SVP

Analysts

Operator

Good day, everyone, and welcome to the CAMAC Energy's Fourth Quarter and Full Year 2013 Conference Call. Just a reminder today's call is being recorded.

At this time for opening remarks and introductions I would like to turn the call over to Director of Corporate Finance and Investor Relations, Christopher Heath. Please go ahead, sir.

Christopher D. Heath

Thank you for joining us for CAMAC Energy's Fourth Quarter 2013 Earnings and Operational Update Call.

This conference call includes forward-looking statements. The risks associated with forward-looking statements have been outlined in the earnings release and in CAMAC Energy's SEC filings, and we incorporate these by reference for this call.

Joining me on today's call is Kase Lawal, Chairman and Chief Executive Officer; Segun Omidele, Senior Vice President of Exploration and Production and Mr. Earl McNiel, Senior Vice President and Chief Financial Officer.

I'll now turn the call over to our Chairman and CEO, Kase Lawal. Please go ahead, sir.

Kase L. Lawal

Thank you, Chris. Welcome to the new CAMAC Energy. We are pleased to announce that 2013 was indisputably the most transformational year in our history. We announced a $270 million equity commitment from the Public Investment Corporation of South Africa, we signed a definitive agreement to acquire the remaining economic interests in OML 120 and 121 offshore Nigeria from Allied Energy. And finally we announced our intent to dual list on the Johannesburg Stock Exchange.

These transactions were overwhelmingly approved by our shareholders and I am pleased to announce that all these transactions are closed. In addition to our listing on the New York Stock Exchange we are also now listed on Johannesburg Stock Exchange under the symbol, CME. With all of these transactions behind us we can now focus on increasing production, reserves and cash flow through the [drill bit].

To that end I am very proud to report that CAMAC Energy, our sole operator achieved exceptionally brilliant result for the Oyo-7 well offshore Nigeria, which exceeded our internal pre-drill estimates in the Pliocene formation and successfully discovered the presence of hydrocarbon in the Miocene formation for the first time.

This Miocene results are very encouraging due to the fact that Miocene is the most prolific producing zone in deepwater Nigeria and CAMAC Energy has prospective resources of over 1 billion barrel of oil equivalents in the Miocene alone. We look forward to drilling our first Miocene exploration prospect with a partner in the next 12 to 18 months.

Keep in mind, our drilling success rate in Oyo Field continues to be a perfect 100% or seven out of seven to-date. This is an outstanding track record of success and we look forward to applying our technical and operation expertise to our significant frontier exploration in Kenya and Gambia. More importantly we have achieved this result with outstanding safety and environmental performance.

In the meantime our immediate plan is to focus on development wells to increase our current production, revenues and cash flow. The Northern Offshore Drillship, Energy Searcher has been secured for up to two years commencing upon arrival to the Oyo Field later this month and drilling of this horizontal section and completion activity for Oyo-7 will begin in April.

We anticipate initial production from this well at 7,000 barrels of oil per day which will provide shareholders with a 250% production increase within the next few months compared to today’s production of 2,000 barrels per day. We then intend to immediately drill and complete Oyo-8 and bring online an additional 7,000 barrels of oil per day net to the company by providing an additional 100% increase in production and all these by the year-end.

Addition to the drilling rig being secured for up to two years our current FPSO, Armada Perdana has been secured for up to seven years commencing January 1, 2014 for existing and future production offshore Nigeria. Securing both the rig and FPSO under the long term contract is a significant feat for our company and we would like to thank Northern Offshore and Armada Oil for their continued support and cooperation.

I would now turn the call over to Segun Omidele, our Senior Vice President of Exploration and Production to provide an operational update on our frontier exploration assets in Kenya and the Gambia.

Segun Omidele

Thank you, Chairman. As you are aware Kenya has been very active in the news recently with several new oil and gas discoveries by our peers, including 600 million to 1 billion barrels of oil discovered to date by Tullow. We are very fortunate to have a strong foothold of over nine million net acres in the highly prolific frontier exploration, Lamu Basin.

CAMAC Energy has full operatorship and 100% interest in two onshore blocks and two offshore blocks in Kenya. Exploration activities on Block L1B and L16 onshore and Block 27 and L28 offshore continue to be active in Lamu Basin in Kenya. We completed an Environmental Social Impacts Assessment Study last month on Block L1B and L16 and preparations are underway for a 2D seismic shoot to occur later this year.

For offshore Block L27 and L28 we are currently participating in a multi-client 2D seismic data acquisition that will conclude this month and we expect final data delivery in June. Plans are to then conduct a geological and geophysical study incorporating the newly acquired data. We plan to drill the first exploration well on L1B or L16 in 2015.

Moving to the Gambia, we are making solid progress as we continue the exploration activities for offshore Blocks A2 and A5. Existing 2D seismic is currently being reprocessed and a regional geologic study and possible 3D seismic shoot are also planned for later this year. The first exploration well in Gambia is scheduled to be drilled in 2016.

We are pleased with the initial findings of our exploration study in both Kenya and Gambia and look forward to making discoveries in the near future. I would now like to turn the call over to our CFO, Earl McNiel who will discuss the company's financial results.

Earl McNiel

Thank you, Segun. As announced today CAMAC Energy's fourth quarter net loss was $5 million or $0.01 per basic and diluted share. There was no lifting during the quarter and therefore no revenues were recognized. For the full year we reported a net loss of $15.9 million or $0.04 per basic and diluted share.

Our cash balance today is approximately $45 million after receiving the initial tranche of the PIC investment and will grow by an additional $50 million upon receipt of the second tranche. With anticipated success from our Oyo development joint program, specifically wells number 7 and 8 we look forward to generating substantial operating cash flow beginning in the second half of this year. We remain focused on ensuring that CAMAC Energy has a strong balance sheet to support our operational activity and projected growth.

Operator at this time we would like to open the lines for questions. Thank you.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions). Our first question is from [David Clarke with GSB Holdings]. Go ahead please.

Unidentified Analyst

Well, yes, I'd like to congratulate you, I mean last year and in particular the fourth quarter was just remarkable for the company and remarkable for the early shareholders into CAMAC and the company now really can launch itself. So as a shareholder I am really pleased with what's going on and have no -- not much to suggest because you guys are doing all the right things.

There is one thing I'd like to ask maybe Dr. Lawal or anybody that wants to answer, that's all over the newspaper, the London newspapers about this Nigerian company that's floating, Seplat which is I guess an onshore company which I would think is far, far more dangerous than being offshore. And has there been -- do you know anything about that and does that relate to us because the news certainly in the Financial Times is showing that London is very receptive to this kind of E&P operation and operation in Africa. And if London is receptive to that is London maybe more receptive than say New York is and is that some place where overtime we should be. I am not suggesting we should do anything right way but maybe overtime that is a place in addition to Johannesburg and do you have any comment on that?

Kase L. Lawal

Well. Thank you very much, David. And thank you for your continued support of our company in terms of your investment in our organization. We truly do appreciate it and we pledge to continue to uphold that fiduciary responsibility. Our forecast is to continue to execute as an organization, in terms of the goals and objectives that we set out which is a five year program. And I am glad to see and read also of another company that was going to list on London Stock Exchange. I think that is very positive for our organization and for our shareholders.

And the good news is coming out of Nigeria and you see other organizations that are listing in internationally recognized stock exchanges. On a side note two of those guys that are Chief Executives I might add use to work for Allied Energy for 12 years and it's a pride of ours to see some of the individuals that were in the early beginnings of Allied Energy to be spinning off and actually doing very well.

To come back to your question, whether we are looking at other exchanges, as you know just about two weeks ago we launched our secondary listing, which happens to be the first one on Johannesburg Stock Exchange this year and in fact the very first New York Stock Exchange listed company that had ever gone to Africa and had a secondary inward listing on the stock exchange in Africa. So we believe that we will need time to achieve the goals and objectives that led us to be in South Africa and be able to expose our shareholders and our organization to a very deep investment pool and investors -- institutional investors that are in South Africa.

So we will continue to focus on that, we will continue to build on that for the benefit of all our shareholders. Again thank you very much David for your continued support of our organization.

Operator

(Operator Instructions). Showing no further questions in our queue this concludes the question-and-answer session. I would like to turn the conference back over to Kase Lawal for any closing remarks.

Kase L. Lawal

Well, thank you very much. We truly appreciate the support that we have gotten over the last four years from all the investors that have stood by us over the last several years. We pledged to you at that time that we would do our best to try to build a company that you will be proud of and that will achieve a superior return on your investments. We continue to do that.

We are very focused in what we are doing. The team here are working 24X7, flat out to be able to execute on the projects that we have on hand. In terms of what we've been able to achieve, just in the recent times, you would notice that our production in terms of projected closing at the end of this year of 14% is in excess of 4,000% when you look at what we had before this merger.

Equally important is your stock price in terms of the share value, that has gained in excess of 220% over the same period. So we look forward to continue to focus as management on execution and we believe with that will come the recognition in terms of the market place for your shares and the values that you have invested in us.

We look forward to communicating with you in terms of what we are doing in the near future and in terms of our goals for the next 12 months. Thank you very much for your time. Have a good day.

Operator

The conference is now concluded. Thank you for attending today's presentation and please disconnect your lines.

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