TIDMEXI
RNS Number : 5342Z
Exillon Energy Plc
08 March 2013
Exillon Energy plc
Preliminary unaudited results for the year ended 31 December
2012
8 March 2013
Exillon Energy plc ("Exillon") (EXI.LN), a London listed
independent oil producer with assets in two oil-rich regions of
northern Russia, Timan-Pechora ("Exillon TP") and West Siberia
("Exillon WS"), today issues its preliminary unaudited results for
the year ended 31 December 2012.
From the Chief Executive
-- Production up 45%, exceeding 16,000 bpd in December
-- EBITDA up 136% to US$46.1 million (up from US$19.5 million in 2011)
-- Net profit of US$12.1 million (up from a net loss of US$10.4 million in 2011)
-- Completed oil treatment and power generation facilities in both Exillon TP and Exillon WS
-- Commissioned own entry point into Transneft pipeline network
in Exillon WS increasing EBITDA per barrel in H2 2012
Mark Martin, Chief Executive, said:
"Exillon made excellent operational and financial progress
during a very busy 2012. Our drilling programme delivered annual
production growth of 45%, and we also expect soon to announce an
updated reserves report. We have completed a number of one off
infrastructure projects in ETP and EWS which have materially
increased our profitability per barrel.
Financially, we have a strong balance sheet with US$127.9
million of cash (as of yesterday), EBITDA up over 130% and a move
into net profit. We will accelerate our development strategy in
2013 and realise further value for shareholders through ongoing
growth in production, EBITDA and reserves."
Dear Shareholders,
Exillon has enjoyed a very successful 2012, increasing oil
production by 45% from 3.24 million to 4.69 million barrels. In
order to build on this success in 2013 we intend to accelerate our
drilling plans, targeting six new wells in 2013 in ETP from two
well pads, and approximately fifteen new wells in EWS from four
well pads.
Financial Performance
Our EBITDA increased 136% from US$19.5 million to US$46.1
million, with a net profit of US$12.1 million (compared to a net
loss of US$10.4 million in 2011). Our revenue increased from
US$203.0 million to US$301.9 million and netback (which we define
as revenue less Mineral Extraction Tax, Export Duty and Transneft
charges) rose 63% from US$63.6 million to US$103.5 million.
This strong growth in EBITDA was a result of our continuing
investment in surface infrastructure, our ongoing drilling
programme and slightly higher oil prices. During 2012 we completed
our oil treatment and power generation facilities in both Exillon
TP and Exillon WS, and in July we commissioned our own entry point
into the Transneft pipeline network in Exillon WS. The completion
of this entry point improved our EBITDA per barrel in the second
half of 2012. It is also an important part of our strategy of
owning our own infrastructure and controlling our sales routes.
For the full year 2012 our EBITDA was equivalent to US$9.9 / bbl
compared to US$6.1 / bbl in 2011. EBITDA per barrel in H2 2012 was
US$11.8 / bbl compared to US$7.5/ bbl in H1 2012. This continuing
growth was a function of both the improvements to our
infrastructure and to economies of scale as production
increased.
75% of our oil production in 2012 was from Exillon WS and 25%
from Exillon TP. Both units were profitable in 2012 although
Exillon WS is currently larger and enjoys greater economies of
scale than Exillon TP. EBITDA per barrel on an operating level
(before central costs) was US$13.2 / bbl in Exillon WS (2011:
US$9.3 / bbl) and US$9.5 / bbl in Exillon TP (2011: US$7.3 /
bbl).
Our balance sheet remains strong with US$121.0 million of cash
and cash equivalents as at 31 December 2012. We have a term loan
from Credit Suisse of US$100 million which matures in 2017. This is
our only debt. As at 31 December 2012 debt was US$100.2 million, so
our net cash position at year end was US$20.8 million.
As at 7th March 2013 our cash balance had increased to US$127.9
million.
Operational Excellence
We have seen excellent results from our drilling programme this
year. The greatest success was in Exillon WS from Pad 5 in the
North East of our EWS I field. The high natural flow rates,
achieved without any well stimulation, demonstrate that the newly
developed areas of this reservoir are thick and of high quality.
Pad 7, which is adjacent to Pad 5, will be developed during
2013.
All of our new wells are now being drilled at a 60 degree angle,
exposing double the net pay compared to vertical wells. During the
year our completion and cementing procedures were improved, and we
have substantially increased our water injection rates to sustain
the productivity of our fields.
Investor Relations and Corporate
To reinforce our investor relations efforts we appointed
Investec to act as joint broker alongside Mirabaud. We also listed
our shares on the Warsaw Stock Exchange to broaden the range of
investors who are able to buy Exillon.
We have canvassed the views of our major investors about
disclosure of production data and the consensus was that monthly
disclosure was excessive. We will therefore publish quarterly
production data in 2013.
During 2012 we also made progress in controlling our central
overhead costs. For example we have reduced our financial audit
costs by 23%.
Acquisitions and Reserves
We made two acquisitions in 2012, both in Timan Pechora. In
January we announced the acquisition of the ETP VII licence which
increased our contiguous licence area to 344km2. In September -
November 2012 we have signed a number of preliminary agreements to
process the acquisition of subsoil licences and certain other
non-current assets of VenlockNeft LLC ("Venlock") for a total
consideration of US$2.7 million. This will add a further 1,075
km(2) of prospective areas, more than quadrupling the total area of
Exillon TP to 1,419 km(2). We will continue to consider contiguous
acquisitions in both Exillon WS and Exillon TP if and when these
become available.
Our strategy is to invest in the development of our oil fields
in order to increase 1) production 2) EBITDA and 3) reserves. In
2012 our oil production grew 45% and our EBITDA grew 136%. The
third component of our strategy will be assessed by the independent
reserves audit of our assets. This is currently under preparation
by Miller & Lents in Houston, and we expect to release it
shortly.
Mark Martin
Chief Executive Officer
OPERATIONAL REVIEW
Drilling
In 2012 we drilled 16 wells (twelve producers and four water
injection wells). Details of this drilling programme were announced
throughout 2012 via RNS, and all announcements can be found on
www.exillonenergy.com.
Exillon TP
Exillon TP produced 1,185,557 bbl and generating revenue of
US$51.9 million.
We successfully completed an oil processing facility and power
generation facilities.
Exillon WS
Exillon WS produced 3,507,045 bbl and generated revenue of
US$250.0 million.
In February 2010, we began construction of a Transneft oil
terminal, which was successfully completed in 2012
and commissioned in July 2012.
Financial
US dollars account for approximately 83% of our cash with the
remaining 17% held in Russian Roubles.
Capital expenditure for the period was US$86.5 million (2011:
US$97.3 million). Of total capital expenditure, US$30.7 million was
attributable to drilling (2011: US$22.9 million), US$45.7 million
to infrastructure (2011: US$66.7 million), and US$10.1 million to
seismic data acquisition and interpretation (2011: US$6.4 million).
The infrastructure spend included completion of Exillon's own entry
point into the Transneft pipeline network, completion of an oil
treatment and power generation facilities in both Exillon TP and
Exillon WS, construction of infield camps, roads and pipelines.
FINANCIAL REVIEW
The Consolidated Financial Information and notes which follow
should be read in conjunction with this review which has been
included to assist in the understanding of our financial position
as at 31 December 2012.
Summary
We maintained a strong financial position in 2012 due to rising
production levels, improved efficiency and replacement of our
existing loan facility.
EBITDA increased by 136% from US$19.5 million in 2011 to US$46.1
million in 2012.
Net profit for the year, which includes depreciation costs,
foreign exchange translation effects, loss on write-off of
non-current assets and share based compensation costs amounted to
US$12.1 million compared to net loss of US$10.4 million in
2011.
Revenue
Our revenue for the year ended 31 December 2012 increased by 49%
year-on-year, reaching US$301.9 million (2011: US$203.0 million),
of which US$166.0 million or 55% came from export sales of crude
oil and US$135.9 million or 45% came from domestic sales of crude
oil. This increase in revenue is attributable to:
-- An increase in production leading to a 47% increase in sales
from 3,170,715 bbl in 2011 to 4,651,049 bbl; and
-- An increase in average commodity prices: we achieved an
average oil price of US$105/bbl (2011: US$102 / bbl) for export
sales and US$44 / bbl (2011: US$41 / bbl) for domestic sales.
Operating Results
Operating costs excluding depreciation, depletion and
amortisation increased to US$127.6 million (2011: US$80.4 million)
following an increase in production of 45% to 4,692,602 bbl (2011:
3,242,503 bbl). The difference between the production volumes and
sales volumes is due to the change in the oil inventory balance
during the year. The increase in production costs is mainly related
to the growth of mineral extraction tax from US$64.5 million in
2011 to US$99.8 million in 2012, as a result of both higher
production volumes and increased average commodity prices in 2012
used in the calculation of the tax. Another cost driver leading to
the growth in other taxes incurred was the increased rates of gas
flaring penalties introduced in 2012.
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