Addax Petroleum announces 2006 results
Wednesday March 21, 7:29 am ET
Funds Flow From Operations increases by 77 per cent
/NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, AUSTRALIA OR JAPAN/
TORONTO, March 21 /CNW/ - Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC - News), an international oil and gas exploration and production company with a strategic focus on West Africa and the Middle East, today announced its results for the year ended December 31, 2006. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars.
ADVERTISEMENT
This announcement coincides with the filing with the Canadian securities regulatory authorities of Addax Petroleum's Audited Consolidated Financial Statements for the year ended December 31, 2006 and related Management's Discussion and Analysis. Copies of these documents may be obtained via www.sedar.com and the Corporation's website, www.addaxpetroleum.com.
CEO's Comment
Commenting today, Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said: "I am delighted to report that Addax Petroleum's first year as a publicly-traded company has also been our most successful year, both operationally and financially. Addax Petroleum's business in Nigeria, our core area of operations at the time of our initial public offering in February 2006, performed above expectations and has been the key contributor to our record 2006 results. 2006 was also a year of successful expansion of Addax Petroleum's business; we established a significant position in the Gulf of Guinea deep water, diversified our production and reserves base into Gabon through the acquisition of Pan-Ocean and demonstrated the considerable potential of the Kurdistan Region of Iraq through testing of the Taq Taq field. I believe that the performance of all of our business units in 2006 has delivered, and will continue to deliver, value for Addax Petroleum and our shareholders."
Selected Financial Highlights
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- Petroleum sales before royalties in 2006 amounted to $2,029 million,
an increase of 66 per cent over petroleum sales before royalties of
$1,219 million in 2005. Petroleum sales before royalties contribution
from the acquired business of Pan-Ocean Energy Corporation Limited
("Pan-Ocean") was $74 million, representing less than 4 per cent of
the year's sales. An increase of 20 per cent in average crude oil
sales price to $63.40 per barrel (/bbl) as compared to $52.85/bbl
realized in 2005 contributed significantly to the year on year growth
in petroleum sales before royalties.
- Net income in 2006 was $243 million ($1.70 per share), an increase of
18 per cent over net income of $206 million ($1.76 per share) in the
previous fiscal year.
- Funds Flow From Operations for 2006 increased 77 per cent to
$829 million ($5.80 per share) compared to $468 million ($4.00 per
share) in 2005.
- Consideration for the acquisition of the petroleum properties,
including license signature and farm-in fees, in 2006 amounted to
$1,740 million including a cash consideration of $1,441 million to
acquire the business of Pan-Ocean on September 7th, 2006.
- During 2006, the Corporation completed two public offerings of its
common shares which in aggregate realized net proceeds of
$665 million for the Corporation. The two public offerings were (a)
the initial public offering followed by the TSX listing of common
shares in February and (b) a follow-on issue of subscription receipts
in August, subsequently converted into common shares, in connection
with the funding of the acquisition of Pan-Ocean.
- Bank debt increased in 2006 by $750 million to $830 million in
connection with the funding of the acquisition of Pan-Ocean.
Presently, the bank debt is drawn under a 5-year, $1.5 billion
facility.
The following table summarizes the selected financial highlights.
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Selected financial highlights Year ended/
as at December 31
$ million unless otherwise stated 2006 2005 Change
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Petroleum sales before royalties 2,029 1,219 66%
Average crude oil sales price, $/bbl 63.40 52.85 20%
Net income 243 206 18%
Earnings per share, $/share 1.70 1.76 (3%)
Average shares outstanding 143 117 22%
(basic & diluted), million
Funds Flow From Operations 829 468 77%
Funds Flow From Operations per share, $/share 5.80 4.00 45%
Property, plant & equipment 2,083 487 328%
Total assets 2,978 867 244%
Long-term debt 830 80 938%
Shareholders' equity 1,168 298 292%
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Selected New Business Highlights
- During 2006, Addax Petroleum concluded a number of strategic
acquisitions which have established a considerable exploration
presence in the Gulf of Guinea deep water play, expanded the Gulf of
Guinea shallow water position in Nigeria, established Addax Petroleum
as a significant developer and producer in Gabon and increased and
extended participation in the Taq Taq property in the Kurdistan
Region of Iraq.
- New business highlights in 2006 include:
Gulf of Guinea Deep Water
- acquisition of various working interests in Blocks 2, 3 and 4 of
the Joint Development Zone ("JDZ"), an offshore area operated
under treaty between Nigeria and Sao Tome and Principe, and in
OPL291, offshore Nigeria. The Corporation operates JDZ Block 4
and OPL291 and holds a net acreage position of 360,900 acres in
the Gulf of Guinea deep water.
Gulf of Guinea Shallow Water
- acquisition of a 40 per cent participating interest in the Okwok
property, offshore Nigeria and close to OML123, the Corporation's
largest producing property. Addax Petroleum is Technical Adviser
for the Okwok property. Appraisal drilling during the second half
of the year added working interest gross proved plus probable
reserves as at December 31, 2006 of 9 MMbbl at Okwok.
Gabon
- acquisition of the business of Pan-Ocean, a TSX listed company,
positioned the Corporation as a significant, growth-oriented
company in Gabon. The acquired portfolio combines existing
production with large development potential and considerable
exploration upside in both operated and non-operated properties.
As at December 31, 2006, the Corporation's working interest gross
proved plus probable reserves in Gabon were estimated to be 98
MMbbl.
Kurdistan Region of Iraq
- in November, the Taq Taq production sharing agreement was amended
to reflect revised terms and an increase in Addax Petroleum's
effective interest to 36 per cent in the Taq Taq field and an
extension of the Taq Taq license to include a potentially large
undrilled exploration prospect, Kewa Chirmila. As at
December 31, 2006, the Corporations's gross working interest
proved plus probable reserves in Taq Taq were estimated to be 40
MMbbl.
Selected Operational Highlights
- Average working interest gross oil production in 2006 was 90,050
barrels per day (bbl/d) an increase of 38 per cent over 2005 average
production of 65,280 bbl/d. Production contribution from Pan-Ocean,
which was acquired in September, 2006, was 3,750 bbl/d, or 4 per cent
of the annual average.
- Working interest gross proved plus probable reserves, as estimated by
Netherland, Sewell & Associates, in accordance with NI 51-101,
increased 80 per cent to 354 MMbbl as at December 31, 2006 from
197 MMbbl as at December 31, 2005.
- Capital expenditures increased by 109% to $773 million in 2006 from
$370 million in 2005, excluding acquisition considerations, farm-in
fees and license signature fees. Development capital expenditures
totaled $573 million in 2006, an increase of 65 per cent over 2005
development capital expenditure of $348 million. Exploration and
appraisal capital expenditures increased to $200 million in 2006 from
$22 million in 2005.
- Development project highlights in 2006 include:
Nigeria
- conversion of Oil Prospecting License OPL90 to Oil Mining License
OML126
- the start-up of the first development well on the Nda field on
OML126 within six months of approval by the Nigerian authorities
of its field development plan;
- safe and successful change-out of the OML123 FPSO whereby the
Knock Taggart FPSO was replaced by the larger Knock Adoon FPSO;
- bringing on-stream of 13 additional development wells, 7 in
OML123 and 6 in OML126; and
- ongoing surface facilities development at the Oron and Adanga
fields on OML123.
Gabon (since September 7th)
- commissioning of the Addax Petroleum-operated onshore production
and export pipeline system from its Maghena property;
- bringing on-stream of two horizontal development wells on the
onshore Tsiengui and Obangue fields; and
- ongoing installation and commissioning work offshore on the non-
operated Avouma field, which commenced production in early 2007.
- Exploration and appraisal activity and highlights in 2006 include:
Gulf of Guinea Shallow Water (Nigeria and Cameroon)
- 3D seismic acquisition, processing and interpretation on OPL225,
offshore Nigeria and Ngosso, offshore Cameroon, preceding
expected exploration drilling in 2007;
- a four well exploration and appraisal campaign on the Okwok field
all of which encountered oil and tested at oil rates up to 1,220
bbl/d. Two of the wells drilled were suspended as potential
future oil producers;
- an additional three exploration wells were drilled, one on
OML123, which encountered significant gas columns but no oil, and
two on OML126, which were unsuccessful;
Gulf of Guinea Deep Water (Nigeria and JDZ)
- building an expert in-house sub-surface interpretation and
drilling technical team following the establishment of our Gulf
of Guinea deep water position in JDZ Blocks 2, 3 and 4 and OPL291
offshore Nigeria. Subsequently, in March 2007, the Corporation
contracted the services of a deep water drillship to commence
drilling in mid-2008;
Kurdistan Region of Iraq
- drilled and tested the first new well on the Taq Taq field,
TT-04, and commenced drilling of the second new well, TT-05. The
TT-04 well tested at an aggregate flow rate of 29,790 bbl/d from
three separate zones;
- Operating netbacks in 2006 increased 20 per cent to $44.97/bbl
compared to $37.43/bbl in 2005. Unit operating expenses increased
slightly to $6.33/bbl, an increase of less than 1 per cent over the
2005 level of $6.29/bbl.
The following table summarizes selected operational information
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Selected operational results Year ended/
as at December 31
2006 2005 Change
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Annual average working interest
gross oil production (bbl/d)
Nigeria (offshore) 82,460 61,790 33%
Nigeria (onshore) 3,840 3,490 10%
Gabon (offshore) 1,650 - -
Gabon (onshore) 2,100 - -
Total 90,050 65,280 38%
Prices, expenses and netbacks ($/bbl)
Average realized price 63.40 52.85 20%
Operating expense 6.33 6.29 1%
Operating netback 44.97 37.43 20%
Working interest gross oil reserves (MMbbl)
Proved 182 109 67%
Proved plus Probable 354 197 80%
Proved plus Probable plus Possible 480 279 72%
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Dividend
For information purposes, the Corporation declared and paid aggregate dividends in 2006 of CDN$0.10 per share. A dividend of CDN$0.05 per share was declared and paid in the first quarter of 2007 relating to the fourth quarter of 2006.
Recent Developments
In February, 2007 the Corporation completed the drilling and flow testing of the TT-05 well on the Taq Taq field in the Kurdistan Region of Iraq. The TT-05 well tested at an aggregate oil rate of 26,550 bbl/d from two separate zones. In March 2007, the Corporation together with Sinopec entered into an agreement with Aban Offshore Limited for the provision of a deep water drillship to start drilling as early as the second quarter of 2008 on JDZ Block 4 and OPL291 where the Corporation is the operator and JDZ Block 2 where Sinopec is the operator.
Outlook
The Corporation's outlook for 2007 is in line with guidance provided to date. Addax Petroleum expects annual average working interest gross oil production to approximate 127 to 133 Mbbl/d from its Nigeria and Gabon operations.
AI
