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2016-11-16

SHAMARAN Q3 2016 FINANCIAL AND OPERATING RESULTS

ShaMaran Petroleum Corp Periodisk information/Kvartalsrapport SHAMARAN Q3
2016 FINANCIAL AND OPERATING RESULTS November 15, 2016 - ShaMaran Petroleum
Corp. ("ShaMaran" or the "Company") (TSX VENTURE: SNM) (NASDAQ OMX: SNM) is
pleased to announce its financial and operating results for the nine months
ended September 30, 2016. Unless otherwise stated all currency amounts
indicated as “$” in this news release are expressed in thousands of United
States dollars. On November 7, 2016 the Assignment, Novation and Fourth
Amendment Agreement to the PSC (the “4th PSC Amendment”) and Atrush
Facilitation Agreement were concluded between TAQA Atrush B.V. (“TAQA” and
the Operator of the Atrush Block), General Exploration Partners. Inc.
(“GEP” and a wholly owned subsidiary of ShaMaran), Marathon Oil KDV
(“MOKDV”)(together, the “Non-Government Contractors”) and the Kurdistan
Regional Government (“KRG”) resulting in participating interests in the
Atrush Block PSC of TAQA at 39.9%, the KRG at 25%, GEP at 20.1% and MOKDV
at 15%. In addition these agreements include the terms for repayment to the
Non-Government Contractors for costs which they have agreed to pay for on
behalf of the KRG, including those relating to the Feeder Pipeline.
Construction of the 30,000 bopd Atrush Phase 1 Production Facility
(“Production Facility”) is complete and commissioning is in progress. The
Atrush-2 (“AT-2”) and Atrush-4 (“AT-4”) wells were successfully completed
in the second and third quarters of this year. All four wells intended for
production are now completed, connected to the Production Facility and
ready for start-up. Work on the pipeline being constructed between the
Production Facility and the block boundary (the “Spur Pipeline”) is
expected to be completed in the fourth quarter of 2016. Work has now
commenced on the final 35km section of pipeline which will run from the
Atrush block boundary to the tie-in point on the main export pipeline (the
“Feeder Pipeline”) and is subject to the terms of an Engineering,
Procurement and Construction (“EPC”) contract between TAQA and KAR Company
(“KAR”) which became effective on November 7, 2016. The length and
complexity of the commercial discussions associated with the EPC contract,
the 4th PSC Amendment, and the Atrush Facilitation Agreement have brought
the commencement of the Atrush Feeder Pipeline closer to the winter season
which means there is an increased risk to the schedule. While completion in
the first quarter of 2017 is still the target and a possibility, it is
probable that first production from Atrush will be further delayed to the
second quarter of 2017. As a result the Company estimates that it will
require approximately $20 million of additional funding which the Company
expects will be made available by increasing GEP’s Super Senior Bond
through facilities provided for in GEP’s April 2016 financing arrangement.
FINANCIAL AND OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2016 During the reporting period the Company continued its appraisal and
development campaign in respect of the Atrush petroleum property located in
the Kurdistan Region of Iraq which constitutes the continuing operations of
the Company. Atrush currently generates no revenues. Financial Results The
Company reports a net loss of $7.4 million in the first three quarters of
2016 which was primarily driven by general and administrative expenses,
share based payments expense and finance cost, the substantial portion of
which were expensed borrowing costs on the Company’s Senior Bonds and Super
Senior Bonds. These expenses have been slightly offset by interest income
on interest bearing funds as well as service fees. Condensed Interim
Statement of Comprehensive Income (Unaudited, expressed in thousands of
United States Dollars) Three months Nine months ended September ended
September 30, 30, 2016 2015 2016 2015
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Continuing Operations Income Service fees 90 - 120 -
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Expenses Depreciation and amortisation expense (12) (13) (34) (45) Share
based payments expense (58) (186) (192) (1,038) General and administrative
expense (695) (384) (3,006) (1,899) Loss before finance items and income
tax (765) (583) (3,232) (2,982) expense
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Finance income 16 88 39 634 Finance cost (1,393) (1,331) (4,228) (3,993)
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Net finance cost (1,377) (1,243) (4,189) (3,359)
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-------- Loss before income tax expense (2,052) (1,826) (7,301) (6,341)
Income tax expense (14) (23) (55) (84)
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Loss from continuing operations (2,066) (1,849) (7,356) (6,425)
Discontinued operations Net gain from discontinued operations - 46 - 32
Loss for the period (2,066) (1,803) (7,356) (6,393)
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Other comprehensive income Items that may be reclassified to profit or (11)
(48) 53 5 loss: Currency translation differences Actuarial loss on defined
pension plan - - (505) -
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Total other comprehensive (loss) / income (11) (48) (452) 5
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Total comprehensive loss for the period (2,077) (1,851) (7,808) (6,388)
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Condensed Interim Consolidated Balance Sheet (Unaudited, expressed in
thousands of United States Dollars) At September 30, At December 31, 2015
2016
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Assets Non-current assets Property, plant and equipment 214,210 177,044
Intangible assets 89,256 88,645 303,466 265,689
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Current assets Cash and cash equivalents, restricted 8,715 1,512 Cash and
cash equivalents, unrestricted 6,198 30,409 Other current assets 284 200
15,197 32,121
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Total assets 318,663 297,810
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Liabilities and equity Current liabilities Accrued interest expense on
bonds 6,950 2,252 Accounts payable and accrued expenses 4,587 9,560 Current
tax liabilities - 31 11,537 11,843
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Non-current liabilities Borrowings 155,804 148,263 Provisions 10,795 8,080
Pension liability 2,207 -
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168,806 156,343
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Total liabilities 180,343 168,186
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Equity Share capital 611,179 593,179 Share based payments reserve 6,427
6,235 Cumulative translation adjustment (30) (83) Accumulated deficit
(479,256) (469,707)
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Total equity 138,320 129,624
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Total liabilities and equity 318,663 297,810
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Total assets increased during the first nine months of 2016 by $20.9
million which corresponds to increases in share capital and equity reserves
by $18.3 million, borrowings by $7.5 million and other non-current
liabilities by $4.9 million which were offset by an increase in the
accumulated deficit by $9.5 million, principally due to the net loss
recorded in the period, and a decrease in current liabilities by $0.3
million. Property, plant & equipment assets increased by $37.2 million
during the three quarters of 2016 due to $27.6 million of Atrush
development costs and capitalised borrowing costs of $9.6 million incurred
during the period. The increase in intangible assets by $0.6 million during
the first nine months of 2016 is due to $0.3 million of Atrush exploration
costs and capitalised borrowing costs of $0.3 million incurred in the
period. Condensed Interim Consolidated Cash Flow Statement (Unaudited,
expressed in thousands of United States Dollars) Three months Nine months
ended September ended September 30, 30, 2016 2015 2016 2015
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Operating activities Net loss from continuing operations (2,066) (1,849)
(7,356) (6,425) Adjustments for: Interest expense on senior secured bonds
1,375 1,321 4,103 3,964 – net Share based payments expense 58 186 192 1,038
Unwinding discount on decommissioning 19 - 62 - provision Depreciation and
amortisation expense 12 13 34 45 Pension expense - - 14 - Interest income
(6) (43) (39) (164) Foreign exchange (gain) / loss (10) (45) 64 (470)
Changes in provisions - 711 - 444 Changes in current tax liabilities (8) 2
(31) (7) Changes in other current assets (41) (11) (84) 1,340 Changes in
accounts payable and accrued (4,317) 1,848 (4,970) (3,429) expenses Cash
used in discontinued operations - (8) - (16) Net cash inflows from /
(outflows to) (4,984) 2,125 (8,011) (3,680) operating activities
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Investing activities Interest received on cash deposits 6 43 39 164
Purchases of intangible assets (58) (13,404) (56) (46,771) Purchase of
property, plant and (8,641) (1) (25,186) (3) equipment Net cash outflows to
investing (8,693) (13,362) (25,203) (46,610) activities
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Financing activities Proceeds on bond issue - - 17,000 - Bond transaction
costs - - (780) - Transaction costs on Rights Offering - - - 60,462 Shares

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