Full Release - Addax Petroleum announces Second Quarter 2007 results
Tuesday August 7, 7:18 am ET
<< - Funds Flow From Operations increased by 46 per cent and net income increased by 74 per cent - Working interest gross oil production increased by 54 per cent, to an average of 123,000 barrels per day - Continued exploration success offshore Nigeria and step-out appraisal success at Taq Taq >>
CALGARY, Aug. 7 /CNW/ -
Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC) today announced its financial and operational results for the quarter ended June 30, 2007. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars.
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This announcement coincides with the filing with the Canadian and UK securities regulatory authorities of Addax Petroleum's Financial Statements for the quarter ended June 30, 2007 and related Management's Discussion and Analysis. Copies of these documents may be obtained via www.sedar.com, www.londonstockexchange.com and the Corporation's website, www.addaxpetroleum.com.
A conference call will be held for analysts and investors at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. time today, Tuesday August, 7. Full details can be found at the end of this announcement.
CEO's Comment
Commenting today, Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said: "Once again we have delivered strong and solid quarterly results. I am delighted to report further production growth which, together with good cost discipline, enables us to continue delivering strong financial and operational performance. We believe that we have excellent reinvestment opportunities, demonstrated in the quarter by our exploration successes offshore Nigeria and step-out appraisal success at Taq Taq. We continue to build a platform for growth for Addax Petroleum. During the quarter, we increased our capital base through a well-received convertible bond issue and completed our secondary listing on the London Stock Exchange which I expect to be an important contributor to our objective of maximising shareholder value."
Selected Financial Highlights
- Petroleum sales before royalties in the second quarter of 2007
amounted to $753 million, an increase of 44 per cent over petroleum
sales before royalties of $523 million in the second quarter of 2006.
The growth in petroleum sales before royalties arose predominantly
from increased petroleum sales volumes as the average crude oil sales
price increased slightly by 1 per cent to $68.21 per barrel (/bbl) as
compared to $67.85/bbl realized in the corresponding period in 2006.
- Net income in the second quarter of 2007 was $101 million, an
increase of 74 per cent over net income of $58 million in the second
quarter of 2006. Net income per share increased by 59 per cent to
$0.65 per share (basic) in the second quarter of 2007 compared to
$0.41 per share (basic) in the corresponding period in 2006.
- Funds Flow From Operations for the second quarter of 2007 increased
46 per cent to $287 million compared to $196 million for the
corresponding period in 2006. Funds Flow From Operations per share
increased by 32 per cent to $1.85 per share (basic) in the second
quarter of 2007 compared to $1.40 per share (basic) in the
corresponding quarter in 2006.
- In May, the Corporation successfully issued $300 million of senior
unsecured convertible bonds due in 2012.
- Also in May, the Corporation was introduced to the Official List and
to trading on the Main Market of the London Stock Exchange.
The following tables summarize the selected second quarter and first half
financial highlights.
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Selected second quarter financial highlights Quarter ended
June 30
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$ million unless otherwise stated 2007 2006 Change
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Petroleum sales before royalties 753 523 44%
Average crude oil sales price, $/bbl 68.21 67.85 1%
Net income 101 58 74%
Earnings per share, $/share (basic) 0.65 0.41 59%
Average shares outstanding (basic), million 155 140 11%
Funds Flow From Operations 287 196 46%
Funds Flow From Operations per share (basic),
$/share 1.85 1.40 32%
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Selected first half financial highlights Half Year
ended June 30
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$ million unless otherwise stated 2007 2006 Change
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Petroleum sales before royalties 1,380 917 50%
Average crude oil sales price, $/bbl 63.09 63.95 (1%)
Net income 180 114 58%
Earnings per share, $/share (basic) 1.16 0.85 36%
Average shares outstanding (basic), million 155 134 16%
Funds Flow From Operations 550 370 49%
Funds Flow From Operations per share (basic),
$/share 3.55 2.76 29%
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Selected Operational Highlights
- Average working interest gross oil production in the second quarter
of 2007 was 123.0 thousand barrels per day (Mbbl/d), an increase of
54 per cent over second quarter 2006 average oil production of
79.9 Mbbl/d. Nigeria production increased by 30 percent to
104.1 Mbbl/d compared to 79.9 Mbbl/d in the corresponding period in
2006. Gabon contributed 18.9 Mbbl/d in the second quarter of 2007 (no
contribution in the second quarter of 2006). Total oil production
during the quarter was 11.2 MMbbl, as compared to oil sales volumes
of 11.0 MMbbl during the quarter.
- Continued exploration success in OML137 offshore Nigeria, where oil
and gas discoveries were made at Ofrima North and, at the start of
the third quarter, Udele West, and step-out appraisal success at the
Taq Taq field in the Kurdistan Region of Iraq.
- Capital expenditures, excluding new business acquisition
considerations, farm-in fees and license signature fees, increased by
52 per cent to $261 million in the second quarter of 2007, up from
$172 million in the second quarter of 2006. Development capital
expenditures totaled $174 million in the second quarter of 2007, an
increase of 28 per cent over second quarter 2006 development capital
expenditure of $136 million. Exploration and appraisal capital
expenditures increased to $87 million in the second quarter of 2007
from $36 million in the second quarter of 2006.
- Throughout the second quarter of 2007, the Corporation directly
operated six drilling rigs: three offshore Nigeria, one onshore
Nigeria and two onshore Gabon, and through its joint venture company,
Taq Taq Operating Company, one further drilling rig in the Kurdistan
Region of Iraq.
- Development project highlights in the second quarter of 2007 include:
Nigeria
- four new development wells were drilled, all on OML123 and all
four new wells were placed on production during the quarter;
- surface facilities development was ongoing at the Oron and Adanga
fields on OML123.
Gabon
- two development wells were drilled on the Corporation's onshore
license areas;
- a total of three new wells were placed on production, all onshore,
comprising the two development wells drilled in the quarter and
one previously drilled well;
- surface facilities development was ongoing at the onshore Maghena
and offshore Etame license areas.
- Exploration and appraisal activity and highlights in the second
quarter of 2007 include:
Gulf of Guinea Shallow Water (Nigeria and Cameroon)
- two exploration wells were drilled offshore Nigeria in the
quarter, both on OML137 resulting in the two discoveries, Ofrima
North and Udele West, the latter at the start of the third
quarter;
- as reported on July 12, 2007, the Ofrima-2 exploration well,
drilled on the Ofrima North structure, discovered a 140 feet gross
oil bearing interval which, based on static pressure data
measurements, is anticipated to be a light oil of approximately
39 degrees API, and three gas bearing intervals with individual
gross gas columns of 29, 43 and 158 feet. A second exploration
well, Udele-2, discovered seven gas bearing intervals with
individual gross gas columns of between 41 and 113 feet, 542 feet
in aggregate. Both discovery wells were suspended and the
Corporation intends to re-enter each well to carry out flow tests
over selected intervals later in the year.
- in Cameroon, the Corporation recently contracted for a drilling
rig to start exploration drilling on the Ngosso license area later
in 2007.
Gabon
- the Corporation has started a 3D development and appraisal seismic
survey over the southern portion of the Maghena license area. The
Corporation is working to extend seismic acquisition to cover the
southern portion of the adjacent Awoun license area, operated by
Shell Gabon and in which the Corporation has a 40 per cent working
interest. The Corporation anticipates that the 3D survey, once
acquired, processed and interpreted, will provide valuable
information in the further development, appraisal and exploration
of this area which contains the Obangue, Koula and Damier fields;
- as reported on April 10, 2007, the Corporation acquired a 50 per
cent interest in and operatorship of the Epaemeno exploration
license area, which lies immediately north of the Corporation's
Maghena and Awoun license areas onshore Gabon. The Epaemeno
acquisition is subject to the consent of the government of Gabon.
Gulf of Guinea Deep Water (Nigeria and JDZ)
- technical studies are ongoing to evaluate exploration prospect
drilling locations.
Kurdistan Region of Iraq
- as reported on June 4, 2007, a successful step-out appraisal well,
TT-06, was drilled and tested at an aggregate rate of 18.9 Mbbl/d
from three separate intervals. The TT-06 well was drilled
approximately 3.6 kilometres north-northwest of the crestally-
located TT-05 well;
- during the second quarter, the TT-07 well was spudded
approximately 2.2 kilometres southeast of the TT-05 well location.
Presently, the TT-07 well is being prepared for flow testing, the
results of which will be announced following the completion of
testing;
- recently, the TT-08 well was spudded approximately 1.1 kilometers
north of the TT-05 well location with the objective of appraising
the flank of the field;
- a 2D seismic survey commenced over the Kewa Chermila area and was
recently concluded, following which a 3D seismic survey was
started over the Taq Taq field.
- Operating netbacks in the second quarter of 2007 increased by 4 per
cent to $51.17/bbl compared to $49.17/bbl in the second quarter of
2006. Unit operating expenses in the second quarter of 2007 decreased
by 18 per cent to $5.75/bbl compared to the second quarter 2006 level
of $6.99/bbl, reflecting unit cost improvements on the upgraded
replacement FPSO on OML123 offshore Nigeria.
The following tables summarize the selected second quarter and first half
operational information.
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Selected second quarter operational highlights Quarter ended
June 30
---------------
2007 2006 Change
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Annual average working interest gross
oil production (Mbbl/d)
Nigeria (offshore) 96.6 76.1 27%
Nigeria (onshore) 7.5 3.8 97%
Nigeria sub-total 104.1 79.9 30%
Gabon (offshore) 6.4 - -
Gabon (onshore) 12.5 - -
Gabon sub-total 18.9 - -
Total 123.0 79.9 54%
Prices, expenses and netbacks ($/bbl)
Average realized price 68.21 67.85 1%
Operating expense 5.75 6.99 (18%)
Operating netback 51.17 49.17 4%
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Selected first half operational highlights Half year
ended June 30
---------------
2007 2006 Change
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Annual average working interest
gross oil production (Mbbl/d)
Nigeria (offshore) 94.4 76.6 23%
Nigeria (onshore) 6.6 3.5 89%
Nigeria sub-total 101.0 80.1 26%
Gabon (offshore) 6.4 - -
Gabon (onshore) 12.2 - -
Gabon sub-total 18.6 - -
Total 119.6 80.1 49%
Prices, expenses and netbacks ($/bbl)
Average realized price 63.09 63.95 (1%)
Operating expense 6.72 7.05 (5%)
Operating netback 46.75 45.51 3%
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Dividend
The Board of Directors of the Corporation has declared a dividend of CDN$0.05 per share for the second quarter of 2007. The dividend is payable on September 13, 2007 to shareholders of record on August 30, 2007. A dividend of CDN$0.05 per share was declared and paid in the second quarter of 2007 relating to the first quarter of 2007. In accordance with Canada Revenue Agency Guidelines, dividends paid by the Corporation during the period are eligible dividends.
AOG Shareholding in Addax Petroleum Corporation
As reported on July 20 and July 31 last, the Corporation's largest shareholder, the Addax & Oryx Group Ltd. ("AOG"), has reduced its shareholding in Addax Petroleum to approximately 55.5 million shares, representing approximately 36 per cent of the Corporation's issued shares. The reduction in AOG's shareholding in the Corporation took place when some shareholders in AOG exchanged their shares in AOG for shares in the Corporation already held by AOG. The beneficial interests of the Corporation's executive management in Addax Petroleum remain unaltered as a result of the reduction of AOG's shareholding.
Outlook
The Corporation's outlook for 2007 is in line with guidance provided to date. Addax Petroleum expects average working interest gross oil production to approximate 127 to 133 Mbbl/d from its Nigeria and Gabon operations in 2007. Capital expenditure in 2007 is forecast to total $1,150 million, a decrease from $1,178 million, with $340 million allocated for exploration and $810 million for development expenditures. Forecast capital expenditures are allocated as follows: $750 million is forecast to be spent on Nigerian producing assets, $30 million to be spent on Nigerian non-producing assets, and $240 million to be spent on Gabon producing assets, $90 million on Taq Taq and $40 million on other assets, primarily on JDZ and Cameroon.
