HOUSTON, Aug. 12, 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 and six months ended June 30, 2013. The functional and reporting currency of the Company is the United States dollar.
Q2 2013 Financial Highlights
- The Company reported Q2 total production of 23,843 boe/d, up 10% from year ago levels of 21,713 boe/d. Offshore production totaled 21,095 bbl/d, a 9% increase from year ago levels of 20,778 bbl/d. Offshore production was affected by mechanical downtime on two horizontal wells at Bua Ban North due to problems with a new completion technology. One of these wells has since been repaired and is performing in line with expectations. Onshore production was 2,748 boe/d, up 16% from 2,362 boe/d in the same period last year due to stronger natural gas demand in Thailand.
- EBITDAX for Q2 2013 was $83.3 million, a 36% decline from the $130.2 million recorded in Q2 2012. The decrease in EBITDAX was driven entirely by the timing of crude oil sales, as the Company recorded an increase in crude oil inventory of 526,017 bbl during the second quarter, the revenue from which will be recognized in the third quarter.
- Cash flow from operations per fully diluted share was $0.82, a decrease from the year ago level of $1.18, also driven by crude oil sales timing and the inventory build.
- After normalizing revenue to a production basis, rather than based on lifting volumes, Q2 2013 revenue would have been $188.6 million, a 3% increase over year ago levels, driven by a 9% increase in production volumes and offset by a 5% decline in commodity pricing.
Operations Update
The Company has completed repair work on the first of two horizontal wells at Bua Ban North that experienced issues with the "swelling packer" completion. The repair work on the second well will be completed with a hydraulic workover unit later in August. The Company also drilled two additional water injection wells at Bua Ban North B for pressure maintenance in two separate fault blocks. The Manta drilling rig is currently being mobilized to Malaysia to begin the work program at the Kapal field.
The Company has begun to build on the success of its pilot hydraulic fracturing program which was completed in the first quarter. A total of five wells at Bua Ban Main have been sidetracked and the new wellbores have been designed to optimize fracture completion results. The frac equipment is expected to arrive in mid-August and the first frac well is expected to be onstream by early September.
Offshore production averaged 20,290 bbl/d for the month of July. Offshore production was affected by 3 days of downtime at the Bua Ban North B platform in July to bring the newly drilled water injectors onstream. Onshore production for July averaged 2,012 boe/d, lower than previous months due to normal seasonal maintenance at the Nam Phong plant, bringing total Company production to 22,302 boe/d for the month.
Randy Bartley, President & CEO of Coastal Energy commented:
"The first half of 2013 has met us with both continued success along with some operational headwinds. Total Company production for the second quarter increased 10% year over year, but offshore production has been affected by some operational and mechanical issues. Our previously expected offshore production ramp up has been further delayed by damage that was sustained to the two Mobile Offshore Production Units ("MOPUs") which were scheduled to be placed in service by the beginning of the third quarter. This has delayed initial production in Malaysia and the start-up of Songkhla H production in the Gulf of Thailand by approximately one quarter. Onshore production remains strong and has grown 16% year over year, and we expect onshore production levels to remain elevated.
"During the second quarter the Company re-initiated its Normal Course Issuer Bid to repurchase up to 5% of the Company's outstanding shares. Management believes that this is an effective and accretive use of free cash flow at current market prices. The Company has already repurchased 259,800 shares at an average price of C$15.30.
"Although the Company has encountered some operational challenges in the first half of 2013, these have largely been resolved and we expect continued growth as we continue to develop and explore our asset base."
The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three and six months ended June 30, 2013 with the notes thereto and the related Management Discussion and Analysis can be found either on Coastal's website at www.CoastalEnergy.com or on SEDAR at www.sedar.com. All amounts are in US$ thousands, except share and per share amounts.
| Three months ended | Six months ended | |||
| June 30, | June 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Revenues and Other Income | ||||
| Oil sales | 136,904 | 194,639 | 363,704 | 383,718 |
| Royalties | (14,037) | (20,514) | (40,347) | (40,757) |
| Oil sales, net of royalties | 122,867 | 174,125 | 323,357 | 342,961 |
| Reimbursement of expenses under Malaysia risk service contract | 4,486 | -- | 6,771 | -- |
| Other income (Note 12) | (1,015) | 9,778 | (754) | (393) |
| 126,338 | 183,903 | 329,374 | 342,568 | |
| Expenses | ||||
| Production | 35,601 | 41,164 | 78,534 | 77,374 |
| Malaysia risk service contract | 4,486 | -- | 6,771 | -- |
| Depreciation and depletion (Note 7) | 13,878 | 18,590 | 37,183 | 38,634 |
| Net profits interest (Note 13) | (7) | 869 | 1,919 | 869 |
| General and administrative | 8,269 | 7,057 | 16,050 | 15,384 |
| Exploration (Note 6) | 13,230 | 286 | 13,230 | 286 |
| Debt financing fees | 1,045 | 351 | 1,573 | 632 |
| Finance | 132 | 195 | 1,347 | 1,201 |
| (Gain) loss on property, plant and equipment | 15 | -- | (4) | -- |
| 76,649 | 68,512 | 156,603 | 134,380 | |
| Net income before income taxes, share of earnings from Apico LLC | 49,689 | 115,391 | 172,771 | 208,188 |
| Share of earnings from Apico LLC (Note 8) | 5,391 | 5,497 | 10,609 | 9,504 |
| Net income before income taxes | 55,080 | 120,888 | 183,380 | 217,692 |
| Income taxes (Note 15) | ||||
| Current | (2,062) | 45,289 | 43,003 | 81,897 |
| Deferred | 37,185 | 32,095 | 67,424 | 43,798 |
| 35,123 | 77,384 | 110,427 | 125,695 | |
| Net income and comprehensive income | 19,957 | 43,504 | 72,953 | 91,997 |
| Net income and total comprehensive income attributable to: | ||||
| Shareholders of Coastal Energy | 18,905 | 42,150 | 70,984 | 90,285 |
| Non-controlling interest | 1,052 | 1,354 | 1,969 | 1,712 |
| 19,957 | 43,504 | 72,953 | 91,997 | |
| Net income per share: | ||||
| Basic (Note 14) | 0.17 | 0.37 | 0.62 | 0.79 |
| Diluted (Note 14) | 0.16 | 0.36 | 0.61 | 0.76 |
| The accompanying notes are an integral part of these condensed interim consolidated financial statements. | ||||
| June 30 | December 31, | |
| As at | 2013 | 2012 |
| $ | $ | |
| Assets | ||
| Current Assets | ||
| Cash | 39,022 | 63,897 |
| Restricted cash (Note 4) | 6,442 | 6,452 |
| Accounts receivable (Note 5) | 33,897 | 56,848 |
| Derivative asset (Note 11) | 84 | 132 |
| Crude oil inventory | 21,754 | 15,611 |
| Marine fuel inventory | 5,682 | 5,245 |
| Prepaids and other current assets | 3,969 | 628 |
| Total current assets | 110,850 | 148,813 |
| Non-Current Assets | ||
| Exploration and evaluation assets (Note 6) | 66,849 | 118,350 |
| Property, plant and equipment (Note 7) | 711,503 | 560,493 |
| Investment in Apico LLC (Note 8) | 65,806 | 60,266 |
| Deposits and other assets | 6,265 | 6,271 |
| Total non-current assets | 850,423 | 745,380 |
| Total Assets | 961,273 | 894,193 |
| Liabilities | ||
| Current Liabilities | ||
| Accounts payable and accrued liabilities (Note 9) | 139,799 | 217,757 |
| Current portion of long-term debt (Note 11) | 22 | 34 |
| Current portion of derivative liabilities (Note 11) | 181 | 1,372 |
| Total current liabilities | 140,002 | 219,163 |
| Non-Current Liabilities | ||
| Long-term debt (Note 11) | 95,933 | 95,066 |
| Non-current portion of derivative liabilities (Note 11) | 14 | 502 |
| Derivative liability - warrants (Note 10) | 2,396 | 3,784 |
| Deferred tax liabilities | 165,847 | 98,423 |
| Decommissioning liabilities | 45,599 | 46,726 |
| Total non-current liabilities | 309,789 | 244,501 |
| Shareholders' Equity (Note 14) | ||
| Common shares | 215,141 | 213,260 |
| Contributed surplus | 22,292 | 18,940 |
| Warrants | ||
| Retained earnings | 264,807 | 193,877 |
| Total Shareholders' Equity | 502,240 | 426,077 |
| Non-controlling interest | 9,242 | 4,452 |
| Total equity | 511,482 | 430,529 |
| Total liabilities and equity | 961,273 | 894,193 |
| Commitments and contingencies (Note 17) | ||
| The accompanying notes are an integral part of these condensed interim consolidated financial statements. | ||
| Three months ended | Six months ended | |||
| June 30, | June 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Operating activities | ||||
| Net income | 19,957 | 43,504 | 72,953 | 91,997 |
| Adjustments: | ||||
| Share of earnings from Apico LLC | (5,391) | (5,497) | (10,609) | (9,504) |
| Unrealized gain on derivative instruments | (1,414) | (15,892) | (1,631) | (11,885) |
| Depletion and depreciation | 13,878 | 18,590 | 37,183 | 38,634 |
| Finance expense | 132 | 195 | 1,347 | 1,201 |
| Amortisation of debt financing fees | 339 | 351 | 867 | 632 |
| Share-based compensation | 1,383 | 1,645 | 3,867 | 4,636 |
| Deferred income taxes | 37,185 | 32,095 | 67,424 | 43,798 |
| Unrealized foreign exchange (gain) loss | 616 | (158) | (404) | (66) |
|
Gains (losses) on disposal of property, plant and equipment |
15 | -- | (4) | -- |
| Exploration expense | 13,230 | 286 | 13,230 | 286 |
| Income taxes paid | (71,733) | (129) | (78,717) | (129) |
| Interest received | 8 | 1 | 35 | 3 |
| Interest paid | (1,043) | (531) | (2,161) | (1,252) |
| Dividends received from Apico LLC | 2,729 | -- | 5,069 | -- |
| 9,891 | 74,460 | 108,449 | 158,351 | |
| Change in non-cash working capital: | ||||
| Accounts receivable | 111,813 | 4,306 | 22,951 | (11,231) |
| Inventory | (13,490) | 3,584 | (6,580) | (1,892) |
| Prepaids and other current assets | (2,412) | (710) | (3,341) | 38 |
| Accounts payable and accrued liabilities | (7,628) | 11,124 | (14,565) | (8,233) |
| Current income taxes payable | (2,062) | 45,160 | 43,003 | 81,768 |
| Cash flow provided by operating activities | 96,112 | 137,924 | 149,917 | 218,801 |
| Financing Activities | ||||
| Issuance of common shares, net of issuance costs | -- | 1,034 | 1,288 | 2,026 |
| Cash settlement of restricted stock units | -- | -- | (156) | -- |
| Repurchase of shares | -- | (15,033) | -- | (15,033) |
| Borrowings under long-term debt | -- | -- | 15,000 | -- |
| Repayment of long-term debt | -- | -- | (15,000) | (30,000) |
| Loan arrangement fees | (12) | (222) | (12) | (968) |
| Distributions to non-controlling interest | (1,326) | (1,792) | (2,619) | (1,792) |
| Contributions from non-controlling interest | 3,451 | -- | 5,440 | -- |
| Cash flow provided by (used in) financing activities | 2,113 | (16,013) | 3,941 | (45,767) |
| Investing Activities | ||||
| Decrease in restricted cash | 42 | 18 | 10 | 22,054 |
| Expenditure on property, plant and equipment | (80,997) | (45,698) | (176,969) | (90,927) |
| Acquisition of increased ownership interest in Apico LLC | -- | -- | -- | (9,250) |
| Proceeds from disposal of property, plant and equipment | -- | -- | 533 | -- |
| Deposits and other assets | -- | 131 | -- | 131 |
| Cash flow used in investing activities | (80,955) | (45,549) | (176,426) | (77,992) |
| Effect of exchange rate changes on cash | (1,797) | (616) | (2,307) | (1,391) |
| (Decrease) increase in cash | 15,473 | 75,746 | (24,875) | 93,651 |
| Cash - Beginning of period | 23,549 | 40,900 | 63,897 | 22,995 |
| Cash - End of period | 39,022 | 116,646 | 39,022 | 116,646 |
| 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.