TIDMCEO
RNS Number : 6771S
Coastal Energy Company
11 November 2013
TSX: CEN November 11, 2013
AIM: CEO
Coastal Energy Announces Third Quarter 2013 Financial Results
& Operations Update
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 and nine months ended September 30, 2013. The functional
and reporting currency of the Company is the United States
dollar.
Q3 2013 Financial Highlights
- 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.
- 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.
INCOME STATEMENT
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.
BALANCE SHEET
September December
30 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.
CASH FLOW STATEMENT
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.comor 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.
Enquiries:
Coastal Energy Company
Email: investor@CoastalEnergy.com +1 (713) 877-6793
Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409
3494
Rory Murphy / Andrew Emmott
Macquarie Capital (Europe) Limited (Broker) +44 (0) 20 3037
2000
Steve Baldwin/Andrew Jones
FirstEnergy Capital LLP(Broker)
Hugh Sanderson / Travis Inlow +44 (0) 20 7448 0200
Buchanan
Tim Thompson / Ben Romney +44 (0) 20 7466 5000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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