C&C Energia Reports First Quarter Operating and Financial Results
CALGARY, ALBERTA--(Marketwire - May 10, 2012) - C&C Energia Ltd. ("C&C Energia" or the "Corporation") (TSX:CZE) is pleased to report its operating and financial results for the three months ended March 31, 2012.
Average daily production for the first quarter 2012 was 10,391 bopd which was nearly double that of the same period in 2011. Funds flow from operations for the three months ended March 31, 2012 was $41.7 million, an increase of over 75% from the prior year period. During the first quarter 2012, C&C Energia realized an average price of $111.44 on its sales generating operating netbacks of $63.70 per barrel. The Corporation has a strong balance sheet with a $63.2 million adjusted working capital surplus (including $94.8 million in cash) and no debt.
Current production is approximately 10,350 bopd and average production for 2012 remains forecast to be between 10,000 and 10,500 bopd, generating approximately $160 million in after tax cash flow based on an expected realized price of approximately $93.50 per barrel.
C&C Energia will be filing its interim financial statements and management's discussion and analysis as at and for the three months ended March 31, 2012, which will contain detailed information regarding the Corporation's results. When filed, these documents will be available for review under C&C's profile on the SEDAR website (www.sedar.com).
Notes (See "GAAP, Additional GAAP and Non-GAAP Measures", below:
(1) Operating cash flow is oil revenues less royalties, operating expenses, transportation expenses and administration expenses. Operating cash flow is a non-GAAP measure (as defined herein) because it is not presented in the 2011 annual consolidated financial statements.
(2) Funds flow from operations is cash flow from operating activities before changes in other non-cash working capital items. Funds flow from operations is an additional GAAP measure because it is presented in Note 12 to the Corporation's 2011 annual consolidated financial statements.
(3) Adjusted working capital surplus includes current assets less current liabilities excluding risk management contracts (unrealized gains (losses) on commodity swaps) and deferred taxes. Adjusted working capital surplus is a non-GAAP measure because it is not presented in the 2011 annual consolidated financial statements.
(4) Excludes impact of risk management contracts (unrealized gains (losses) on commodity swaps).
FINANCIAL & OPERATIONAL HIGHLIGHTS
•Increased average first quarter 2012 production to 10,391 barrels of oil per day ("bopd"), nearly double from the same quarter of 2011 and on par with the fourth quarter of 2011. Current production levels are approximately 10,350 bopd.
•Funds flow (after tax) from operations for the first quarter was $41.7 million, an increase of over 75% compared to the first quarter of 2011.
•Net income for the first quarter of 2012 was $13.5 million compared to net loss of $(1.0) million in the first quarter of 2011. Reflected in the current quarter net income is a realized loss on commodity hedges of $6.0 million relating to strong oil prices over the period.
•Operating netbacks for the three months ended March 31, 2012 were $63.70 per barrel based on an average realized price of $111.44 per barrel.
•In 2011, the Corporation constructed a major facilities project, costing approximately $40 million on the Cravoviejo block at the Carrizales Field. This facility will handle up to 120,000 barrels per day of total fluids, has 35,000 barrels of oil storage, a 6.4 megawatt power plant, water disposal, and three new truck loading facilities. The completion of these facilities is expected to result in approximately 10% operating costs savings for the balance of 2012.
•During the first quarter 2012, the Corporation completed drilling five wells, three exploration wells (IVF-2, Cachalote-1 and Tardigrado-1), one appraisal well (Abedus-3) and one planned injection well (Carrizales-19) resulting in three dry holes and one oil well.
•Over the past two weeks, the Corporation completed the drilling of the Tormento-1 well to 15,200 feet on the Llanos 19 block and the Saimiri-1 well to 10,267 feet on the Cravoviejo block. Both of these exploration wells have been cased and will be completed and tested over the next 30-45 days.
•For the remainder of the second quarter 2012, the Corporation plans to drill and test two development wells on the Zopilote field and two exploratory wells, one in the Pajaro Pinto block (Lagarto-1) and one on the Cachicamo block (Greta Oto-1).
C&C Energia has 8 blocks (7 operated) in Colombia with a total of 626,000 acres (508,000 net acres). The Corporation's lands are located in the Llanos Basin (4 blocks), Middle Magdalena Valley (1 block), and Putumayo Basin (3 blocks).
During the first quarter of 2012, the Corporation invested $48.7 million primarily in the following areas: drilling and completion $20.9 million, workovers $4.6 million, civil works $12.5 million, facilities and roads $6.3 million, seismic programs $2.0 million and general property and capitalized G&A of $2.4 million.
During the first quarter 2012, the Corporation drilled three wells on its Llanos Basin blocks, Abedus-3 and Carrizales-19 (Cravoviejo) and IVF-2 (Cachicamo). The Abedus-3 appraisal well tested oil from the Carbonera C-5 Formation and will be tied into the Carrizales production facilities. Carrizales-19 is the second water injection well put into service to provide pressure support for the water flood program in the Gacheta reservoir in the Carrizales field. The full impact of this waterflood program on production and reserves in the Gacheta reservoir will be determined as further results are assessed. The IVF-2 exploration well on the Cachicamo Block was plugged and abandoned.
Subsequent to the end of the first quarter the Corporation drilled and cased, to 10,267 feet, the Saimiri-1 exploration well on the west side of the Cravoviejo Block. This well will be completed and tested over the next 30 days. In addition the Corporation commenced drilling the Zopilote-8 development well, one of two development wells planned in the Zopilote field for the second quarter of 2012.
In the Llanos 19 block, the Corporation recently reached total depth of 15,200 feet in the Tormento-1 well and plans to complete and test this well during the second quarter. Also, during the second quarter the Corporation plans to drill an exploratory well, Lagarto-1, on the Pajaro Pinto Block and the Greta Oto-1 well, the first of five exploratory wells planned in 2012 for the Cachicamo Block.
During the first quarter 2012, the Cachalote-1 and Tardigrado-1 wells, on the Andaquies Block (64% working interest in 114,875 acres), were drilled and evaluated. These wells encountered prospective Neme and Caballos sandstone reservoirs with good porosity and oil shows but were water bearing and were plugged and abandoned. C&C and its partner currently are evaluating the future exploration plans for this block.
The Corporation currently is participating (50% working interest) in a 95km2 3D seismic program on the Aguti prospect located on the eastern margin of the Putumayo-8 block (102,800 acres). This new 3D seismic data combined with Corporation's existing 2D seismic will assist in defining drilling locations and currently one well is planned for the fourth quarter 2012.
CAPITAL AND OUTLOOK
The Corporation has approved a capital investment budget for 2012 of between $140 and $150 million. The Corporation expects to invest funds as follows: seismic, approximately $4 million to $6 million; drilling, completions and testing approximately $87 million to $92 million; field development and work-overs approximately $17 million; facilities and equipment approximately $27 million to $30 million; and $5 million for various other projects. Production for 2012 remains forecast between 10,000 and 10,500 bopd, a 20% increase over the 2011 annual average daily production. The Corporation plans to drill 19 wells in 2012, with the potential for three follow-on appraisal wells.
ABOUT C&C ENERGIA LTD.
The Corporation, through its subsidiary Grupo C&C Energia (Barbados) Ltd., is engaged in the exploration for and the development and production of oil resources in Colombia. Its strategy is to develop producing oil assets by appraising and developing existing discoveries and exploring in areas assessed by management to be of low to moderate risk. With a total of eight blocks (seven operated) and over 626,000 acres (508,000 net acres) in Colombia, the Corporation's management expects that C&C Energia has considerable upside for future production and reserve growth.