HOUSTON, May 13, 2013 (GLOBE NEWSWIRE) -- 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
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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.
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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.
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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.