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Press release from GlobeNewswire (a Nasdaq OMX company)

Coastal Energy Announces Third Quarter 2012 Financial Results & Operations Update

Monday, November 12, 2012

Coastal Energy Announces Third Quarter 2012 Financial Results & Operations Update05:30 EST Monday, November 12, 2012HOUSTON, Nov. 12, 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 nine months ended September 30, 2012. The functional and reporting currency of the Company is the United States dollar. Third Quarter 2012 Highlights Total Company production increased to 21,798 boe/d in the third quarter from 12,028 boe/d in the same period last year. The Company's offshore production was 19,626 bbl/d compared to 10,191 bbl/d in Q3 2011, with the increase due to the inclusion of production from both platforms at Bua Ban North. Offshore production was impacted by downtime at Bua Ban North and Songkhla during rig moves as well as the MOPU replacement at Bua Ban North. Onshore production of 2,172 boe/d increased from Q3 2011 levels of 1,837 boe/d as natural gas demand continued to recover following the flooding in Thailand in late 2011.   EBITDAX for Q3 2012 was $114.6 million, 157% higher than the $44.7 million recorded in Q3 2011. Revenue and EBITDAX were driven higher by increased oil liftings and commodity prices. Crude oil inventory was 577,863 barrels at September 30, 2012, the revenue from which will be recognized in the fourth quarter. The Company saw closing inventory increase by 121,445 barrels (approximately 27%) during Q3 2012.   The Company announced successful drilling results in the Songkhla A field. The A-10 well, drilled in the eastern most fault block of the field, encountered a record amount of net pay for the basin and exhibited very favorable reservoir characteristics in the Lower Oligocene interval. In late September 2012, the well was brought on production at approximately 4,000 bbl/d. Subsequently, the Company drilled the A-13 well in the previously untested northeast fault block and encountered 67 feet of net pay in the Lower Oligocene. Successful results from the A-13 provide the opportunity for an additional well (Songkhla A-19) higher up structure to add additional pay thickness.    The Company completed the conversion of the Richmond mobile offshore production unit (MOPU). Subsequently, in October 2012, the Richmond was installed at the Bua Ban North B field, increasing production capabilities to 55,000 bbl/d. The previous MOPU in the Bua Ban North B field was purchased by the Company and reinstalled at Bua Ban South.   The Company signed a contract with a subsidiary of Atwood Oceanics, Inc. for the Manta jackup drilling rig. The rig is scheduled to be delivered by late November and will conduct drilling operations for the Company in the Gulf of Thailand and offshore Malaysia.    The Company upsized and amended its senior secured revolving credit facility with BNP Paribas and Commonwealth Bank of Australia. The facility has been increased from $100 million to $200 million and includes two additional banks, Standard Bank and Standard Chartered Bank.    The Company is approximately 60% complete with the acquisition of new 3D seismic data being shot over the entire Songkhla basin. Current expectations are for delivery of the processed data in Q1 2013. The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three and nine months ended September 30, 2012 with the notes thereto and the related Management Discussion and Analysis can be found either on Coastal's website at www.CoastalEnergy.com or on SEDAR at www.sedar.com. All amounts are in US$ thousands, except share and per share amounts. Three months endedNine months ended  September 30,September 30,   2012   2011  2012   2011         Revenues and Other Income       Oil sales 170,894  81,670 554,612  218,854 Royalties (18,305)  (6,295) (59,062)  (17,158) Oil sales, net of royalties 152,589  75,375 495,550  201,696 Other income (Note 11) (5,122)  10,717 (5,515)  (12,394)   147,467  86,092 490,035  189,302        Expenses       Production 32,718  27,148 110,092  66,490 Depreciation and depletion (Note 6) 14,778  13,308 53,412  38,292 Net profits interest (Note 12) 39  --  908  --  General and administrative 9,125  7,802 24,509  19,522 Exploration (Note 5) 7,191  345 7,477  6,829 Debt financing fees 501  258 1,133  523 Finance expenses 1,940  913 3,141  3,276 Gains on disposal, property, plant and equipment (252)  (873) (252)  (873)   66,040  48,901 200,420  134,059       Net income before income taxes and share of      net income from Apico LLC 81,427  37,191 289,615  55,243        Share of net income from Apico LLC (Note 7) 4,537  4,436 14,041  11,964Net income before income taxes 85,964  41,627 303,656  67,207       Income taxes (Note 14)       Current 42,135  135 124,032  135 Deferred 2,778  22,493 46,576  37,681  44,913  22,628 170,608  37,816       Net income and comprehensive income 41,051  18,999 133,048  29,391       Net income and total comprehensive income attributable to:       Shareholders of Coastal Energy 40,100  19,013 130,385  28,467 Non-controlling interest 951  (14) 2,663  924  41,051  18,999 133,048  29,391     Net income per share:     Basic (Note 13)  0.35  0.17  1.15  0.25 Diluted (Note 13)  0.34  0.16  1.10  0.25           The accompanying notes are an integral part of these condensed interim consolidated financial statements.  September 30  December 31, As at2012 2011   $   $      Assets   Current Assets    Cash 29,267  22,995 Restricted cash (Note 3) 6,413  28,447 Accounts receivable (Note 4) 77,236  16,939 Derivative asset (Note 10) 167  59 Crude oil inventory 12,962  11,304 Marine fuel inventory 4,416  2,857 Prepaids and other current assets 950  1,094 Total current assets 131,411  83,695     Non-Current Assets    Exploration and evaluation assets (Note 5) 82,711  31,881 Property, plant and equipment (Note 6) 511,736  355,052 Investment in and advances to Apico LLC (Note 7) 61,046  47,698 Deposits and other assets 6,274  405 Total non-current assets 661,767  435,036Total Assets 793,178  518,731     Liabilities   Current Liabilities    Accounts payable and accrued liabilities (Note 8) 157,513  59,471 Current portion of long-term debt (Note 10) 342  55,662 Current portion of derivative liabilities (Note 10) 3,910  14,557 Derivative liability - Warrants (Note 9) 3,486  2,853 Total current liabilities 165,251  132,543     Non-Current Liabilities    Long-term debt (Note 10) 94,714  22,156 Non-current portion of derivative liabilities (Note 10) 506  1,274 Deferred tax liabilities 116,343  69,767 Decommissioning liabilities 46,915  42,124 Total Non-Current Liabilities 258,478  135,321     Shareholders' Equity (Note 13)    Common shares 212,500  211,554 Contributed surplus 20,116  16,401 Retained earnings 131,754  17,630 Total Shareholders' Equity 364,370  245,585 Non-controlling interest 5,079  5,282Total equity 369,449  250,867Total liabilities and equity 793,178  518,731      Commitments and contingencies (Note 16)         The accompanying notes are an integral part of these condensed interim consolidated financial statements.  Three months endedNine months ended  September 30,September 30,   2012   2011  2012   2011 Operating activities       Net income 41,051  18,999 133,048  29,391 Adjustments:       Share of net income from Apico LLC (4,537)  (4,436) (14,041)  (11,964) Unrealized (gain) loss on derivative instruments 362  (15,019) (11,523)  (4,506) Depletion and depreciation 14,778  13,308 53,412  38,292 Finance expenses 1,940  913 3,141  3,276 Amortisation of debt financing fees 147  248 779  513 Share-based compensation 5,531  1,941 10,167  7,687 Deferred income taxes 2,778  22,493 46,576  37,681 Unrealized foreign exchange (gain) loss 17  (577) (49)  (120) Exploration expense 7,191  345 7,477  6,829 Gains on property, plant and equipment (252)  (873) (252)  (873) Income taxes paid (63,527)  (86) (63,656)  (86) Interest received 2  2 5  4 Interest paid (318)  (405) (1,570)  (2,699) Earnings Distributions from Apico LLC 9,943  7,588 9,943  9,756         Change in non-cash working capital:       Accounts receivable (49,066)  (4,802) (60,297)  (6,595) Inventory (1,325)  840 (3,217)  (3,472) Prepaids and other current assets 106  96 144  576 Accounts payable and accrued liabilities 6,348  5,421 (1,885)  6,311 Current income taxes payable 45,520  -- 127,288  -- Cash flow provided by operating activities 16,689  45,996 235,490  110,001         Financing Activities        Issuance of common shares, net of issuance costs 727  666 2,753  6,108 Repurchase of shares (3,712)  -- (18,745)  -- Borrowings under long-term debt 50,000  -- 50,000  6,275 Repayment of long-term debt --  -- (30,000)  -- Loan arrangement fees (2,915)  (71) (3,883)  (419) Distributions to non-controlling interest (1,074)  (450) (2,866)  -- Other --  (131) --  (506) Cash flow (used in) provided by financing activities 43,026  14 (2,741)  11,458        Investing Activities       Decrease (increase) in restricted cash (20)  6,347 22,034  1,844 Expenditure on property, plant and equipment (140,551)  (45,576) (231,478)  (115,468) Acquisition of increased ownership interest in Apico LLC --  -- --  (1,446) Advances to Apico LLC --  -- (9,250)  250 Proceeds from disposal of property, plant and equipment 352  250 352  (125) Deposits and other assets - Payments (6,000)  (122) (6,000)  (606) Deposits and other assets - Refunds --  -- 131  -- Cash flow used in investing activities (146,219)  (39,101) (224,211)  (115,551)         Effect of exchange rate changes on cash (875)  (501) (2,266)  (1,198)         Increase (decrease) in cash (87,379)  6,408 6,272  4,710 Cash - Beginning of period 116,646  2,186 22,995  3,884Cash - End of period 29,267  8,594 29,267  8,594         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) +44 (0) 20 7409 3494 Rory Murphy / Scott McGregor Macquarie Capital (Europe) Limited (Broker) +44 (0) 20 3037 2000 Paul Connolly / Jeffrey Auld FirstEnergy Capital LLP (Broker) Hugh Sanderson / Travis Inlow +44 (0) 20 7448 0200 Buchanan Tim Thompson / Ben Romney +44 (0) 20 7466 5000