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Press release from GlobeNewswire (a Nasdaq OMX company)

Coastal Energy Announces Second Quarter 2012 Financial Results & Operations Update

Monday, August 13, 2012

Coastal Energy Announces Second Quarter 2012 Financial Results & Operations Update14:18 EDT Monday, August 13, 2012HOUSTON, Aug. 13, 2012 (GLOBE NEWSWIRE) -- Coastal Energy Company (the "Company" or "Coastal Energy") (TSX:CEN) (AIM:CEO), an independent exploration and production company with assets in Thailand, announces the financial results for the three and six months ended June 30, 2012. The functional and reporting currency of the Company is the United States dollar.Second Quarter 2012 Highlights - Total Company production increased to 21,713 boe/d in the second quarter from 9,494 boe/d in the same period last year. The Company's offshore production was 19,351 bbl/d, with the increase due to the inclusion of production from both platforms at Bua Ban North. Full production from Bua Ban North came on throughout January and February. Offshore production volumes in the second quarter were impacted by downtime for the replacement of an FSO at Bua Ban North. Onshore production of 2,362 boe/d increased from Q112 levels and year ago levels as natural gas demand continued to recover following the flooding in Thailand in late 2011 and was 3% above Q211 levels. -  EBITDAX for Q2 2012 was $130.3 million, 230% higher than the $39.5 million recorded in Q2 2011. Revenue and EBITDAX were driven higher by increased oil liftings and commodity prices. Crude oil inventory was approximately 456,418 barrels at June 30, 2012 the revenue from which will be recognized in the third quarter. The Company reduced closing inventory levels by 112,840 barrels (approximately 20%) during Q2. -  The Company announced successful discoveries in the Miocene and Oligocene reservoirs at Bua Ban South. The discoveries have been appraised and determined to be commercial. The Company purchased production facilities for Bua Ban South and will continue appraisal drilling once they arrive on location later in the third quarter. -  The Company announced a Normal Course Issuer Bid to repurchase up to 5% of its outstanding shares (5,715,972 shares). To date, the Company has repurchased approximately 1.25 million common shares on the open market. -  The Company announced that it had been awarded a Small Field Risk Services Contract by PETRONAS for the development of the Kapal, Banang & Meranti cluster of small fields offshore Peninsular Malaysia. Coastal will operate the fields for PETRONAS and will provide upfront development and operational capital. Coastal will recover 100% of its invested capital and will earn a remuneration fee which will be adjusted based on the timely implementation of the agreed field development plan and budget. -  Following quarter end, the Company released the results of an interim third party reserves evaluation by its reserve auditor, RPS Energy Ltd. Total company 2P reserves increased to 149.1 mmboe from 102.1 mmboe at December 31, 2011Operations Update The Company drilled the Songkhla J-01 exploration well to a total depth of 8,600 feet TVD and encountered 168 feet of high quality sand in the Lower Oligocene reservoir with 19% porosity. Oil shows were observed throughout this section of the Lower Oligocene; however, MDT analysis indicates that this wellbore was near the oil water contact in this reservoir. Oil shows were also observed in the pre-tertiary limestone target, but porosity was below commercial levels.  The rig is being mobilized to Songkhla A for development and appraisal drilling. Randy Bartley, President and CEO of Coastal Energy, commented: "The first half of 2012 has been an exceptional six months for Coastal. On top of record levels of production and cash flow, the Company has continued to deliver increases in reserves both through new exploration discoveries and appraisal drilling as well as core analysis on existing assets. "We have been reinvesting our free cash flow to purchase some of the production facilities we were previously leasing for our offshore operations. This will reduce our fixed operating costs across all fields. The Company also announced an exciting expansion of our operations into Malaysia. This contract with PETRONAS is a low risk way for Coastal to enter a new country and we are very excited for our first new venture outside of Thailand. "The Songkhla J-01 exploration well has very interesting implications for the basin. This is the farthest north and east that we've seen oil migration in the Songkhla basin to date. The secondary Lower Oligocene target had oil shows and great reservoir characteristics which will require further appraisal drilling to evaluate. We believe there is significant potential in the Lower Oligocene in updip fault blocks to the north and east of the J-01 well; however, these prospects extend beyond the boundaries of our current 3D seismic data. We are going to wait to drill further appraisal wells until we finish the acquisition and processing of additional 3D seismic which is currently underway. While the pre-tertiary target was below commercial thresholds in this particular location, we do not feel that there is any read-through to other pre-tertiary prospects in the basin based upon these results. "We are moving the rig to Songkhla A to continue development and appraisal drilling to add to our existing production growth. We are also currently bidding on a second rig to begin work in the November 2012 time frame, which would allow our development and exploration programs to continue simultaneously."  The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three and six months ended June 30, 2012 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 June 30,Six months ended June 30,   2012   2011  2012   2011         Revenues and Other Income       Oil sales 194,639  64,628 383,718  137,184 Royalties (20,514)  (5,018) (40,757)  (10,863) Oil sales, net of royalties 174,125  59,610 342,961  126,321 Other income (Note 11) 9,778  (2,027) (393)  (23,111)   183,903  57,583 342,568  103,210        Expenses       Production 41,164  17,124 77,374  39,342 Depreciation and depletion (Note 6) 18,590  11,698 38,634  24,984 Net profits interest (Note 12) 869  --  869  --  General and administrative 7,057  6,457 15,384  11,720 Exploration (Note 5) 286  931 286  6,484 Debt financing fees 195  31 632  265 Finance 351  1,201 1,201  2,363   68,512  37,442 134,380  85,158       Net income before income taxes, share of      net income from Apico LLC 115,391  20,141 208,188  18,052        Share of net income from Apico LLC (Note 7) 5,497  4,272 9,504  7,528Net income before income taxes 120,888  24,413 217,692  25,580       Income taxes (Note 14)       Current 45,289  -- 81,897  -- Deferred 32,095  12,005 43,798  15,188  77,384  12,005 125,695  15,188       Net income and comprehensive income 43,504  12,408 91,997  10,392       Net income and total comprehensive income attributable to:       Shareholders of Coastal Energy 42,150  11,816 90,285  9,454 Non-controlling interest 1,354  592 1,712  938  43,504  12,408 91,997  10,392     Net income per share:     Basic (Note 13)  0.37  0.11  0.79  0.08 Diluted (Note 13)  0.36  0.10  0.76  0.08           The accompanying notes are an integral part of these condensed interim consolidated financial statements.            As atJune 30, 2012 December 31, 2011   $   $      Assets    Current Assets    Cash 116,646  22,995 Restricted cash (Note 3) 6,393  28,447 Accounts receivable (Note 4) 28,170  16,939 Derivative asset (Note 10) 48  59 Crude oil inventory 12,281  11,304 Marine fuel inventory 3,772  2,857 Prepaids and other current assets 1,056  1,094 Total current assets 168,366  83,695     Non-Current Assets    Exploration and evaluation assets (Note 5) 55,101  31,881 Property, plant and equipment (Note 6) 410,420  355,052 Investment in and advances to Apico LLC (Note 7) 66,452  47,698 Deposits and other assets 274  405 Total non-current assets 532,247  435,036Total Assets 700,613  518,731     Liabilities   Current Liabilities    Accounts payable and accrued liabilities (Note 8) 159,218  59,471 Current portion of long-term debt (Note 10) 17  55,662 Current portion of derivative liabilities (Note 10) 3,935  14,557 Derivative liability - Warrants (Note 9) 2,408  2,853 Total current liabilities 165,578  132,543     Non-Current Liabilities    Long-term debt (Note 10) 47,482  22,156 Non-current portion of derivative liabilities (Note 10) --   1,274 Deferred tax liabilities 113,565  69,767 Decommissioning liabilities 46,124  42,124 Total Non-Current Liabilities 207,171  135,321     Shareholders' Equity (Note 13)    Common shares 211,702  211,554 Contributed surplus 18,804  16,401 Retained earnings 92,156  17,630 Total Shareholders' Equity 322,662  245,585 Non-controlling interest 5,202  5,282Total equity 327,864  250,867Total liabilities and equity 700,613  518,731      Commitments and contingencies (Note 16)         The accompanying notes are an integral part of these condensed interim consolidated financial statements.           Three months ended June 30,Six months ended June 30,   2012   2011  2012   2011 Operating activities       Net income 43,504  12,408 91,997  10,392 Adjustments:       Share of net income from Apico LLC (5,497)  (4,272) (9,504)  (7,528) Unrealized (gain) loss on derivative instruments (15,892)  (7,674) (11,885)  10,513 Depletion and depreciation 18,590  11,698 38,634  24,984 Finance expense 195  1,417 1,201  2,363 Amortisation of debt financing fees 351  31 632  265 Share-based compensation 1,645  3,624 4,636  5,746 Deferred income taxes 32,095  12,005 43,798  15,188 Unrealized foreign exchange (gain) loss (158)  308 (66)  457 Exploration expense 286  931 286  6,484 Income taxes paid (129)  -- (129)  -- Interest received 1  1 3  2 Interest paid (531)  (1,982) (1,252)  (2,294) Earnings Distributions from Apico LLC --  1,265 --  2,168   74,460  29,760 158,351  68,740 Change in non-cash working capital:       Accounts receivable 4,306  13,128 (11,231)  (1,793) Inventory 3,584  (5,142) (1,892)  (4,312) Prepaids and other current assets (710)  45 38  480 Accounts payable and accrued liabilities 11,124  (5,223) (8,233)  890 Current income taxes payable 45,160  -- 81,768  -- Cash flow provided by operating activities 137,924  32,568 218,801  64,005         Financing Activities        Issuance of common shares, net of issuance costs 1,034  749 2,026  5,442 Repurchase of shares (15,033)  -- (15,033)  -- Borrowings under long-term debt --  -- --  6,275 Repayment of long-term debt --  -- (30,000)  -- Loan arrangement fees (222)  (348) (968)  (348) Distributions to non-controlling interest (1,792)  -- (1,792)  (156) Other --  (375) --  (375) Cash flow (used in) provided by financing activities (16,013)  26 (45,767)  10,838        Investing Activities       Decrease (increase) in restricted cash 18  (11,036) 22,054  (4,503) Expenditure on property, plant and equipment (45,698)  (33,422) (90,927)  (69,892) Acquisition of increased ownership interest in Apico LLC --  -- (9,250)  -- Advances to Apico LLC --  (1,446) --  (1,446) Deposits and other assets 131  40 131  (3) Cash flow used in investing activities (45,549)  (45,864) (77,992)  (75,844)         Effect of exchange rate changes on cash (616)  (456) (1,391)  (697)         Increase (decrease) in cash 75,746  (13,726) 93,651  (1,698) Cash - Beginning of period 40,900  15,912 22,995  3,884Cash - End of period 116,646  2,186 116,646  2,186         The accompanying notes are an integral part of these condensed interim consolidated financial statements. 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. The Coastal Energy Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10062CONTACT: Enquiries: Coastal Energy Company Email: investor@CoastalEnergy.com +1 (713) 877-6793 Strand Hanson Limited (Nominated Adviser) Rory Murphy / Paul Cocker / Scott McGregor +44 (0) 20 7409 3494 Macquarie Capital (Europe) Limited (Broker) Paul Connolly / 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