HOUSTON, Nov. 11, 2013 (GLOBE NEWSWIRE) -- Coastal Energy Company (the "Company" or "Coastal Energy") (TSX:CEN) (LSE:CEO), an independent exploration and production company with assets in Southeast Asia, announces the financial results for the three and nine months ended September 30, 2013. The functional and reporting currency of the Company is the United States dollar.
Q3 2013 Financial Highlights
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The Company's offshore production increased to 20,388 bbl/d in the third quarter from 19,626 bbl/d in the same period last year due to increases from further development drilling at Bua Ban North as well as the inclusion of production at Bua Ban South. Total Company production increased slightly to 21,832 boe/d from 21,798 boe/d in the same quarter last year as onshore gas production declined to 1,444 boe/d from 2,172 boe/d due to extended seasonal maintenance at the Nam Phong power plant. Total Company production for the nine-month period increased slightly to 22,942 boe/d from 22,093 boe/d in the same period last year due to further development drilling.
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EBITDAX for Q3 2013 was $134.6 million, 18% higher than the $114.6 million recorded in Q3 2012 due to higher production and lifting volumes. The Company's inventory levels decreased by 77,437 barrels in Q3 2013 whereas 121,445 barrels were added to inventory during Q3 2012. The Company's EBITDAX for the nine-month period is in line with 2012 levels despite a modest decline in realized crude pricing due to higher production and lifting volumes.
- After normalizing revenue to a production basis, rather than based on lifting volumes, Q3 2013 revenue would have been $193.8 million, a 6% increase year on year, driven by a 4% increase in production volumes and a 2% decline in commodity pricing.
Operations Update
The Company has completed two development wells at the Kapal field in Malaysia and is currently drilling a third. The Mobile Offshore Production Unit (MOPU) refurbishment has been completed and the MOPU is expected to arrive on location later this month. First oil production at Kapal is expected shortly thereafter.
Following the completion of drilling at the Kapal field, the Manta drilling rig will mobilize to the Meranti field offshore Malaysia and begin appraisal & development drilling there.
Four of five wells at Bua Ban Main have undergone hydraulic fracturing stimulation. The first two wells (BB01 ST1 and BB04 ST1) tested the Eocene sands. The third and fourth wells (BB07 ST1 and BB09 ST1) are testing the Eocene and the Lower Oligocene. The BB07 ST1 and the BB09 ST1 are still cleaning up with increasing oil cuts. The fifth well (BB02 ST1) will be drilled horizontally into the Eocene. BB01 ST1 and BB04 ST1 are flowing mostly water at low rates with slight amounts of oil.
The Songkhla A18, the eastern side of the basin, is also being hydraulically fractured to test the viability of fracturing the Eocene reservoir on the eastern side of the basin.
Following the completion of the frac activities and workovers at Bua Ban Main, the Vickburg rig will have completed its contract and will be released. Approval of the EIA application for eleven exploration wells is expected in the coming weeks. Following this Coastal will submit the application for the Bua Ban development area, which we expect to be approved near the end of the first quarter. Once these are in place, a second rig will likely be contracted in order to maintain a balance between exploration and production.
A successful exploration well was drilled on Block L15/43 onshore Thailand (Coastal 39.0% working interest). The Sinphuhorm East 1 flowed at a restricted rate of 51 MMCF/D from the same horizon that is productive at Sinphuhorm field. The well proves the field extends beyond the current production license into the L15/43 exploration acreage surrounding the Sinphuhorm field. The well did not encounter a gas water contact.
Randy Bartley, President & CEO of Coastal Energy commented:
"The Company continued to make progress in the third quarter of 2013. The first wells at the Kapal field were drilled and we expect first production in Malaysia very shortly. Offshore Thailand production increased slightly from year ago levels and we expect gains to offshore production once the development drilling program at Bua Ban North resumes.
"Regarding our frac progam, the original Bua Ban South frac wells continue to perform in line with expectations after ten months of production. In our latest campaign at Bua Ban Main, the first two wells, which fracced much deeper into the Eocene, have been disappointing. However, the early results of the third and fourth wells in the Eocene and Lower Oligocene sandstone are encouraging. We are still early on the learning curve and are applying multiple fracture technologies to the various prospective reservoirs in the Bua Ban and Songkhla Main fields in order to determine the optimum method for producing these reservoirs. There is a significant amount of oil in place in these tighter reservoirs and we continue to be excited about the application of fracture technology in the Songkhla Basin.
"Onshore, we are very pleased with our second discovery drilled using the 3D seismic data acquired in 2011 and expect to continue to grow our onshore business. Onshore production was lower than previous levels due to increased maintenance at the Nam Phong power plant. However, year-to-date onshore production is still well above 2012 levels.
"We plan to move the rig to the Meranti field in Malaysia following completion of the work at Kapal, which will serve to increase production in Malaysia in late 2013 to early 2014."
The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three and nine months ended September 30, 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 | Nine months ended | ||||
| September 30, | September 30, | ||||
| 2013 | 2012 | 2013 | 2012 | ||
| Revenues and Other Income | |||||
| Oil sales | 201,762 | 170,894 | 565,466 | 554,612 | |
| Royalties | (22,632) | (18,305) | (62,979) | (59,062) | |
| Oil sales, net of royalties | 179,130 | 152,589 | 502,487 | 495,550 | |
| Reimbursement of expenses under Malaysia risk service contract | 30,967 | -- | 37,738 | -- | |
| Other income (Note 12) | (1,361) | (5,122) | (2,115) | (5,515) | |
| 208,736 | 147,467 | 538,110 | 490,035 | ||
| Expenses | |||||
| Production | 38,448 | 32,718 | 116,982 | 110,092 | |
| Malaysia risk service contract | 30,967 | -- | 37,738 | -- | |
| Depreciation and depletion (Note 7) | 17,298 | 14,778 | 54,481 | 53,412 | |
| Net profits interest (Note 13) | -- | 39 | 1,919 | 908 | |
| General and administrative | 11,358 | 9,125 | 27,408 | 24,509 | |
| Exploration (Note 6) | 665 | 7,191 | 13,895 | 7,477 | |
| Debt financing fees | 4,228 | 501 | 5,801 | 1,133 | |
| Finance | 2,579 | 1,940 | 3,926 | 3,141 | |
| Gain on property, plant and equipment | -- | (252) | (4) | (252) | |
| 105,543 | 66,040 | 262,146 | 200,420 | ||
| Net income before income taxes, share of | |||||
| earnings from Apico LLC | 103,193 | 81,427 | 275,964 | 289,615 | |
| Share of earnings from Apico LLC (Note 8) | 2,798 | 4,537 | 13,407 | 14,041 | |
| Net income before income taxes | 105,991 | 85,964 | 289,371 | 303,656 | |
| Income taxes (Note 15) | |||||
| Current | 32,774 | 42,135 | 75,777 | 124,032 | |
| Deferred | 21,378 | 2,778 | 88,802 | 46,576 | |
| 54,152 | 44,913 | 164,579 | 170,608 | ||
| Net income and comprehensive income | 51,839 | 41,051 | 124,792 | 133,048 | |
| Net income and total comprehensive income attributable to: | |||||
| Shareholders of Coastal Energy | 50,720 | 40,100 | 121,704 | 130,385 | |
| Non-controlling interest | 1,119 | 951 | 3,088 | 2,663 | |
| 51,839 | 41,051 | 124,792 | 133,048 | ||
| Net income per share: | |||||
| Basic (Note 14) | 0.45 | 0.35 | 1.07 | 1.15 | |
| Diluted (Note 14) | 0.44 | 0.34 | 1.04 | 1.10 | |
| The accompanying notes are an integral part of these condensed interim consolidated financial statements. | |||||
| September 30 | December 31, | |
| As at | 2013 | 2012 |
| $ | $ | |
| Assets | ||
| Current Assets | ||
| Cash | 66,213 | 63,897 |
| Restricted cash (Note 4) | 4,434 | 6,452 |
| Accounts receivable (Note 5) | 66,889 | 56,848 |
| Derivative asset (Note 11) | 101 | 132 |
| Crude oil inventory | 23,494 | 15,611 |
| Marine fuel inventory | 4,951 | 5,245 |
| Prepaids and other current assets | 2,297 | 628 |
| Total current assets | 168,379 | 148,813 |
| Non-Current Assets | ||
| Exploration and evaluation assets (Note 6) | 69,545 | 118,350 |
| Property, plant and equipment (Note 7) | 790,987 | 560,493 |
| Investment in Apico LLC (Note 8) | 64,900 | 60,266 |
| Deposits and other assets | 6,265 | 6,271 |
| Total non-current assets | 931,697 | 745,380 |
| Total Assets | 1,100,076 | 894,193 |
| Liabilities | ||
| Current Liabilities | ||
| Accounts payable and accrued liabilities (Note 9) | 190,725 | 217,757 |
| Current portion of long-term debt (Note 11) | 37 | 34 |
| Current portion of derivative liabilities (Note 11) | 1,662 | 1,372 |
| Total current liabilities | 192,424 | 219,163 |
| Non-Current Liabilities | ||
| Long-term debt (Note 11) | 110,800 | 95,066 |
| Non-current portion of derivative liabilities (Note 11) | 515 | 502 |
| Derivative liability - warrants (Note 10) | 3,468 | 3,784 |
| Deferred tax liabilities | 187,225 | 98,423 |
| Decommissioning liabilities | 43,955 | 46,726 |
| Total non-current liabilities | 345,963 | 244,501 |
| Shareholders' Equity (Note 14) | ||
| Common shares | 214,754 | 213,260 |
| Contributed surplus | 24,215 | 18,940 |
| Retained earnings | 310,068 | 193,877 |
| Total Shareholders' Equity | 549,037 | 426,077 |
| Non-controlling interest | 12,652 | 4,452 |
| Total equity | 561,689 | 430,529 |
| Total liabilities and equity | 1,100,076 | 894,193 |
| Commitments and contingencies (Note 17) | ||
| The accompanying notes are an integral part of these condensed interim consolidated financial statements. | ||
| Three months ended | Nine months ended | |||
| September 30, | September 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Operating activities | ||||
| Net income | 51,839 | 41,051 | 124,792 | 133,048 |
| Adjustments: | ||||
| Share of earnings from Apico LLC | (2,798) | (4,537) | (13,407) | (14,041) |
| Unrealized loss (gain) on derivative instruments | 1,965 | 362 | 334 | (11,523) |
| Depletion and depreciation | 17,298 | 14,778 | 54,481 | 53,412 |
| Finance expense | 2,579 | 1,940 | 3,926 | 3,141 |
| Amortisation of debt financing fees | 4,079 | 147 | 4,946 | 779 |
| Share-based compensation | 5,453 | 5,531 | 9,320 | 10,167 |
| Deferred income taxes | 21,378 | 2,778 | 88,802 | 46,576 |
| Unrealized foreign exchange loss (gain) | 826 | 17 | 422 | (49) |
| Gains on disposal of property, plant and equipment | -- | (252) | (4) | (252) |
| Exploration expense | 665 | 7,191 | 13,895 | 7,477 |
| Income taxes paid | (21,880) | (63,527) | (100,597) | (63,656) |
| Interest received | 133 | 2 | 168 | 5 |
| Interest paid | (1,140) | (318) | (3,301) | (1,570) |
| Dividends received from Apico LLC | 3,704 | 9,943 | 8,773 | 9,943 |
| 84,101 | 15,106 | 192,550 | 173,457 | |
| Change in non-cash working capital: | ||||
| Accounts receivable | (32,992) | (49,066) | (10,041) | (60,297) |
| Inventory | (1,009) | (1,325) | (7,589) | (3,217) |
| Prepaids and other current assets | 1,672 | 106 | (1,669) | 144 |
| Accounts payable and accrued liabilities | 18,925 | 6,348 | 4,360 | (1,885) |
| Current income taxes payable | 18,931 | 45,520 | 61,934 | 127,288 |
| Cash flow provided by operating activities | 89,628 | 16,689 | 239,545 | 235,490 |
| Financing Activities | ||||
| Issuance of common shares, net of issuance costs | 317 | 727 | 1,605 | 2,753 |
| Cash settlement of restricted stock units | (6,275) | -- | (156) | -- |
| Repurchase of shares | -- | (3,712) | (6,275) | (18,745) |
| Borrowings under long-term debt | 15,000 | 50,000 | 30,000 | 50,000 |
| Repayment of long-term debt | -- | -- | (15,000) | (30,000) |
| Loan arrangement fees | (4,200) | (2,915) | (4,212) | (3,883) |
| Distributions to non-controlling interest | (1,335) | (1,074) | (3,954) | (2,866) |
| Contributions from non-controlling interest | 3,626 | -- | 9,066 | -- |
| Cash flow provided by (used in) financing activities | 7,133 | 43,026 | 11,074 | (2,741) |
| Investing Activities | ||||
| Decrease in restricted cash | 2,008 | (20) | 2,018 | 22,034 |
| Expenditure on property, plant and equipment | (70,953) | (140,551) | (247,922) | (231,478) |
| Acquisition of increased ownership interest in Apico LLC | -- | -- | -- | (9,250) |
| Proceeds from disposal of property, plant and equipment | -- | 352 | 533 | 352 |
| Deposits and other assets - Payments | -- | (6,000) | -- | (6,000) |
| Deposits and other assets - Refunds | -- | -- | -- | 131 |
| Cash flow used in investing activities | (68,945) | (146,219) | (245,371) | (224,211) |
| Effect of exchange rate changes on cash | (625) | (875) | (2,932) | (2,266) |
| Increase (decrease) in cash | 27,191 | (87,379) | 2,316 | 6,272 |
| Cash - Beginning of period | 39,022 | 116,646 | 63,897 | 22,995 |
| Cash - End of period | 66,213 | 29,267 | 66,213 | 29,267 |
| 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.