Returns At ShaMaran Petroleum (CVE:SNM) Are On The Way Up

ShaMaran Petroleum (CVE:SNM) has been making waves in the oil and gas industry, and its shareholders are reaping the benefits. The company's stock price has been on a tear, surging by an impressive 225% over the past year. But what's driving this remarkable performance? Let's dive in and explore the key factors contributing to ShaMaran's recent success.



1. Acquisition of Sarsang Block: In September 2022, ShaMaran acquired a 27.6% working interest in the Sarsang Block, which added immediate incremental participating interest production of over 5,000 bopd of light crude oil (36-39° API). This acquisition is expected to double ShaMaran's average net production by the end of 2022 (Source: "ShaMaran Petroleum Corp. (CVE:SNM) Stock Rockets 28% But Many Are Still Ignoring The Company", Dec 15, 2022). This strategic move has significantly boosted ShaMaran's production and cash flow, contributing to its impressive stock price performance.
2. Improved Oil Reserves: The Sarsang acquisition also enhanced ShaMaran's oil reserves through the addition of high API and low sulphur oil that achieves a low discount compared to other producers (Source: "ShaMaran Petroleum Corp. (CVE:SNM) Stock Rockets 28% But Many Are Still Ignoring The Company", Dec 15, 2022). This improvement in the quality and quantity of ShaMaran's oil reserves has increased the company's asset value, making it an attractive investment opportunity.
3. Strong Cash Position: The combined business is forecast to result in a 2022 year end unrestricted cash balance of up to $105 million (up to $155 million when taking into account the bond buybacks and the early repayment of the Convertible Loan Note issued to an affiliate of TotalEnergies SE) (Source: "ShaMaran Petroleum Corp. (CVE:SNM) Stock Rockets 28% But Many Are Still Ignoring The Company", Dec 15, 2022). This cash balance combined with the $36 million held as restricted cash in line with the 2025 bond agreement is forecast to result in leverage of below 1x net debt to EBITDAX at year end 2022 (pro forma for the Sarsang Acquisition) (Source: "ShaMaran Petroleum Corp. (CVE:SNM) Stock Rockets 28% But Many Are Still Ignoring The Company", Dec 15, 2022). ShaMaran's strong cash position has provided the company with the financial flexibility to invest in growth opportunities and maintain a healthy balance sheet.
4. Growth in Revenue and Profits: ShaMaran delivered oil sales in Q3 2022 of $40 million, 37% higher than Q3 2021; cash flow from operations for Q3 2022 was $28 million, over twice that of Q3 2021; and EBITDAX in Q3 2022 was very strong at $33 million, over double the EBITDAX of Q3 2021 (Source: "ShaMaran Petroleum Corp. (CVE:SNM) Stock Rockets 28% But Many Are Still Ignoring The Company", Dec 15, 2022). ShaMaran's impressive growth in revenue and profits has driven its stock price higher, as investors recognize the company's strong fundamentals and growth prospects.
5. Successful Debt Management: ShaMaran merged its existing bonds into one single $300 million issue bond, with interest on all bonds fully paid on September 26, 2022. During Q3 2022, the Company bought back more of its own bonds, and currently owns in excess of 10% of the 2025 bond. Additionally, on October 3, 2022, the Company announced that it had prepaid, 11 months ahead of the original maturity date, in full (together with applicable interest) the $20 million Convertible Loan Note issued to an affiliate of TotalEnergies SE in connection with the Sarsang Acquisition closing (Source: "ShaMaran Petroleum Corp. (CVE:SNM) Stock Rockets 28% But Many Are Still Ignoring The Company", Dec 15, 2022). ShaMaran's successful debt management has improved its balance sheet and reduced its cost of capital, allowing the company to invest in growth opportunities and maintain a strong financial position.



In conclusion, ShaMaran Petroleum's (CVE:SNM) impressive stock price performance can be attributed to several key factors, including its acquisition of the Sarsang Block, improved oil reserves, strong cash position, growth in revenue and profits, and successful debt management. As ShaMaran continues to execute on its strategic vision, investors can expect the company to maintain its strong momentum and generate significant value for shareholders.