Coastal Energy Announces First Quarter 2013 Financial Results & Operations Update
May 13 2013 - 4:53PM
Coastal Energy Company (the "Company" or "Coastal Energy")
(TSX:CEN) (AIM:CEO), an independent exploration and production
company with assets in Southeast Asia, announces the financial
results for the three months ended March 31, 2013. The functional
and reporting currency of the Company is the United States dollar.
Q1 2013 Financial Highlights
- The Company reported Q1 total production of 23,163 boe/d, up
from year ago levels of 22,773 boe/d. Offshore production totalled
20,460 bbl/d, a slight decrease from year ago levels of 21,031
bbl/d. Offshore production was impacted by several factors,
including longer than expected completion times for the hydraulic
fracturing program at Bua Ban South, delayed production from two
horizontal wells at Bua Ban North due to the initial installation
of "swelling packers" designed to reduce water production and the
Songkhla A-10 well being down for a majority of the quarter
awaiting pump replacement. Onshore production was 2,703 boe/d, up
from 1,742 boe/d in the same period last year due to stronger gas
demand in Thailand.
- EBITDAX for Q1 2013 was $152.5 million, 19% higher than the
$128.4 million recorded in Q1 2012. Revenue and EBITDAX were
driven higher by increased lifting volumes. Crude oil
inventory was approximately 188,115 barrels at March 31, 2013, the
revenue from which will be recognized in the second quarter.
- Operating costs declined 8% year over year on a per barrel
basis to $19.90 / bbl as the Company realized the benefits of costs
reductions related to the purchase of previously leased production
facilities.
- The Company announced successful discoveries at Songkhla A in
two exploration wells which were drilled into previously untested
fault blocks on the western side of the platform.
Operations Update
The Company recently completed the drilling of one exploration
well at the Songkhla M prospect and one appraisal/exploration well
in the Bua Ban North and Bua Ban Terrace Area.
Bua Ban Terrace
The Bua Ban Terrace A-01 well was drilled to a depth of 5,900
feet TVDSS. The well penetrated the Miocene interval within
the existing Bua Ban North field. The Miocene contained 52
feet of net pay with 26% average porosity, which was thicker than
the 40 feet of prognosed pay. The well then penetrated the
Lower Oligocene and Eocene intervals on the western side of the
fault in the Terrace area and encountered 7 feet of net pay in the
Lower Oligocene reservoir with 16% porosity. The Eocene
contained 313 feet of net sand with an average porosity of 18.2
%. Very high gas readings persisted throughout drilling of
the Eocene sections. Although, the majority of the zones in
the Eocene were water-bearing, there were several zones with log
indications of high oil saturation levels. These log readings,
in conjunction with the pay zone in the Lower Oligocene and high
gas readings throughout the Eocene, further confirm oil migration
in the Terrace area.
Songkhla M
The Songkhla M-01 well was drilled to a depth of 9,200 feet
TVDSS. The well encountered an extensive section of excellent
quality Miocene reservoirs which were water bearing. The well also
encountered 57 feet of net sand in the Eocene reservoir with
pervasive oil shows. The Eocene sand section had average
porosity of 11%, which is below the Company's conventional
commerciality threshold.
Randy Bartley, President & CEO of Coastal Energy
commented:
"Coastal Energy had another successful quarter in the first
three months of 2013. The second quarter has also started well
with offshore production averaging 22,800 bbl/d and total Company
production averaging 25,700 boe/d during the month of
April. The Company drilled two successful exploration wells at
Songkhla A, making discoveries in two previously untested fault
blocks on the western side of the platform.
"The results of both exploration wells yielded positive data
points for our exploration portfolio.
"The Bua Ban Terrace well was drilled into the same Terrace
fault block as the previously drilled Bua Ban North A-02 well,
which penetrated the Lower Oligocene to the south of this location
and contains a massive section of high quality, water bearing Lower
Oligocene sands. The encounter of Lower Oligocene net pay in this
well, combined with the A-02 results, points to a potential
stratigraphic trap in the Terrace fault block that is pinched out
between the Terrace A-01 well and the Bua Ban North A-02
well.
"At Songkhla M, we encountered oil shows in both the Miocene and
Eocene intervals. The Miocene had high levels of oil saturation,
providing further confirmation of oil migration in this high
potential section on the eastern side of the Songkhla basin. The M
prospect is located at the southern limit of our existing legacy 3D
survey. However, the 3D survey acquired last year extends much
further to the south and a trend of Eocene closures has been
identified over a 2000 acre area. Given our success in
hydraulically fracturing the Eocene interval with similar
characteristics on the western side of the basin we feel that we
have identified a significant trend for hydraulic fracture
development in the Eocene."
The following financial statements for the Company are
abbreviated versions. The Company's complete financial statements
for the three months ended March 31, 2013 with the notes thereto
and the related Management Discussion and Analysis can be found
either on Coastal's website at www.CoastalEnergy.com or on SEDAR at
www.sedar.com. All amounts are in US$ thousands, except share and
per share amounts.
Three Months Ended March 31, |
2013 |
2012 |
|
|
|
Revenues and Other
Income |
|
|
Oil sales |
226,800 |
189,079 |
Royalties |
(26,310) |
(20,243) |
Oil sales, net of
royalties |
200,490 |
168,836 |
Reimbursement of expenses under
Malaysia risk service contract |
2,285 |
-- |
Other income (Note
12) |
261 |
(10,171) |
|
203,036 |
158,665 |
|
|
|
Expenses |
|
|
Production |
42,933 |
36,210 |
Malaysia risk service
contract |
2,285 |
-- |
Depreciation and depletion
(Note 7) |
23,305 |
20,044 |
Net profits interest (Note
13) |
1,926 |
-- |
General and administrative |
7,781 |
8,327 |
Debt financing fees |
528 |
281 |
Finance |
1,215 |
1,006 |
Gains on disposal of
property, plant and equipment |
(19) |
-- |
|
79,954 |
65,868 |
|
|
|
Net income before income taxes and
share of earnings from Apico LLC |
123,082 |
92,797 |
|
|
|
Share of earnings from Apico LLC (Note
8) |
5,218 |
4,007 |
|
|
|
Net income before income
taxes |
128,300 |
96,804 |
|
|
|
Income taxes (Note 15) |
|
|
Current |
45,065 |
36,608 |
Deferred |
30,239 |
11,703 |
|
75,304 |
48,311 |
|
|
|
Net income and comprehensive
income |
52,996 |
48,493 |
|
|
|
Net income and total comprehensive
income attributable to: |
|
|
Shareholders of Coastal
Energy |
52,079 |
48,135 |
Non-controlling
interest |
917 |
358 |
|
52,996 |
48,493 |
|
|
|
Net income per share: |
|
|
Basic (Note 14) |
0.46 |
0.42 |
Diluted (Note 14) |
0.45 |
0.40 |
|
|
|
The accompanying notes are an
integral part of these condensed interim consolidated financial
statements. |
|
|
|
|
|
As at |
March 31 2013 |
December 31, 2012 |
|
$ |
$ |
|
|
|
Assets |
|
|
Current
Assets |
|
|
Cash |
23,549 |
63,897 |
Restricted cash (Note 4) |
6,484 |
6,452 |
Accounts receivable (Note
5) |
145,710 |
56,848 |
Derivative asset (Note 11) |
131 |
132 |
Crude oil inventory |
9,204 |
15,611 |
Marine fuel inventory |
4,742 |
5,245 |
Prepaids and other current
assets |
1,557 |
628 |
Total current assets |
191,377 |
148,813 |
|
|
|
Non-Current
Assets |
|
|
Exploration and evaluation
assets (Note 6) |
62,921 |
118,350 |
Property, plant and equipment
(Note 7) |
688,724 |
560,493 |
Investment in and advances to
Apico LLC (Note 8) |
63,144 |
60,266 |
Deposits and other assets |
6,271 |
6,271 |
Total non-current assets |
821,060 |
745,380 |
Total Assets |
1,012,437 |
894,193 |
|
|
|
Liabilities |
|
|
Current
Liabilities |
|
|
Accounts payable and accrued
liabilities (Note 9) |
247,216 |
217,757 |
Current portion of long-term
debt (Note 11) |
34 |
34 |
Current portion of derivative
liabilities (Note 11) |
973 |
1,372 |
Total current liabilities |
248,223 |
219,163 |
|
|
|
Non-Current
Liabilities |
|
|
Long-term debt (Note 11) |
95,594 |
95,066 |
Non-current portion of
derivative liabilities (Note 11) |
683 |
502 |
Derivative liability - Warrants
(Note 10) |
3,596 |
3,784 |
Deferred tax liabilities |
128,662 |
98,423 |
Decommissioning
liabilities |
48,302 |
46,726 |
Total non-current
liabilities |
276,837 |
244,501 |
|
|
|
Shareholders' Equity
(Note 14) |
|
|
Common shares |
215,141 |
213,260 |
Contributed surplus |
20,269 |
18,940 |
Warrants |
|
|
Retained earnings |
245,902 |
193,877 |
Total Shareholders' Equity |
481,312 |
426,077 |
Non-controlling interest |
6,065 |
4,452 |
Total
equity |
487,377 |
430,529 |
Total liabilities and
equity |
1,012,437 |
894,193 |
|
|
|
Commitments and contingencies
(Note 17) |
|
|
|
|
|
The accompanying notes are an
integral part of these condensed interim consolidated financial
statements. |
|
|
|
Three Months Ended March 31, |
2013 |
2012 |
Operating activities |
|
|
|
|
|
Net income |
52,996 |
48,493 |
Adjustments: |
|
|
Share of earnings from Apico
LLC |
(5,218) |
(4,007) |
Unrealized (gain) loss on
derivative instruments |
(217) |
4,007 |
Depletion and depreciation |
23,305 |
20,044 |
Finance expenses |
1,215 |
1,006 |
Amortisation of debt financing
fees |
528 |
281 |
Share-based compensation |
2,484 |
2,991 |
Deferred income taxes |
30,239 |
11,703 |
Unrealized foreign exchange
(gain) loss |
(1,020) |
92 |
Gains on disposal of property,
plant and equipment |
(19) |
-- |
Income taxes paid |
(6,984) |
-- |
Interest received |
27 |
2 |
Interest paid |
(1,118) |
(721) |
Dividends received from Apico LLC |
2,340 |
-- |
|
|
|
Change in non-cash working capital: |
|
|
Accounts receivable |
(88,862) |
(15,537) |
Inventory |
6,910 |
(5,476) |
Prepaids and other current
assets |
(929) |
748 |
Accounts payable and accrued
liabilities |
(6,846) |
(19,357) |
Current income taxes
payable |
44,974 |
36,608 |
Cash flow provided by operating
activities |
53,805 |
80,877 |
|
|
|
Financing Activities |
|
|
Issuance of common shares, net
of issuance costs |
1,288 |
992 |
Cash settlement of restricted
stock units |
(156) |
-- |
Borrowings under long-term
debt |
15,000 |
-- |
Repayment of long-term
debt |
(15,000) |
(30,000) |
Loan arrangement fees |
-- |
(746) |
Distributions to
non-controlling interest |
(1,293) |
-- |
Contributions from
non-controlling interest |
1,989 |
-- |
Cash flow provided by (used in)
financing activities |
1,828 |
(29,754) |
|
|
|
Investing Activities |
|
|
(Increase) decrease in
restricted cash |
(32) |
22,036 |
Expenditure on property, plant
and equipment |
(95,972) |
(45,229) |
Acquisition of increased
ownership interest in Apico LLC |
-- |
(9,250) |
Proceeds from disposal of
property, plant and equipment |
533 |
-- |
Cash flow used in investing
activities |
(95,471) |
(32,443) |
|
|
|
Effect of exchange rate changes on
cash |
(510) |
(775) |
|
|
|
(Decrease) increase in cash |
(40,348) |
17,905 |
Cash - Beginning of period |
63,897 |
22,995 |
Cash - End of
period |
23,549 |
40,900 |
|
|
|
The accompanying notes are an
integral part of these condensed interim consolidated financial
statements. |
Randy Bartley, President and Chief Executive Officer of the
Company and a member of the Society of Petroleum Engineering and
Jerry Moon, Vice President, Technical & Business Development, a
member of the American Association of Petroleum Geologists, a
Licensed Professional Geoscientist and a Certified Petroleum
Geologist in the state of Texas, have reviewed the contents of this
announcement.
Additional information, including the Company's complete
competent person's report may be found on the Company's website at
www.CoastalEnergy.com or may be found in documents filed on SEDAR
at www.sedar.com.
This statement contains 'forward-looking statements' as defined
by the applicable securities legislation. Statements relating to
current and future drilling results, existence and recoverability
of potential hydrocarbon reserves, production amounts or
revenues, forward capital expenditures, operation costs, oil and
gas price forecasts and similar matters are based on current data
and information and should be viewed as forward-looking statements.
Such statements are not guarantees of future results and are
subject to risks and uncertainties beyond Coastal Energy's control.
Actual results may differ substantially from the forward-looking
statements.
CONTACT: Enquiries:
Coastal Energy Company
Email: investor@CoastalEnergy.com
+1 (713) 877-6793
Strand Hanson Limited (Nominated Adviser)
Rory Murphy / Andrew Emmott
+44 (0) 20 7409 3494
Macquarie Capital (Europe) Limited (Broker)
Jeffrey Auld
+44 (0) 20 3037 2000
FirstEnergy Capital LLP (Broker)
Hugh Sanderson / Travis Inlow
+44 (0) 20 7448 0200
Buchanan
Tim Thompson / Ben Romney
+44 (0) 20 7466 5000
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