Addax Petroleum announces Record First Quarter 2008 results
Tuesday May 6, 7:32 am ET
**** Gulf of Guinea Deep Water (Nigeria and JDZ)****
********* the Corporation continued its evaluation of drilling locations in the JDZ license areas and its efforts to secure a rig of opportunity to commence drilling operations in the "second half of 2008" ************
<< - 78 per cent increase in Funds Flow From Operations to $469 million - 204 per cent increase in Net Income to $240 million - 20 per cent increase in Production to 139.1 Mbbl/d >>
CALGARY, May 6 /CNW/ - Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC), today announced its results for the quarter ended March 31, 2008. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars.
This announcement coincides with the filing with the Canadian and U.K. securities regulatory authorities of Addax Petroleum's Audited Consolidated Financial Statements for the quarter ended March 31, 2008 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 today Tuesday, May 6, 2008 at 11.00 a.m. Eastern Time / 4.00 p.m. London, U.K. Time. 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: "I am pleased to report that Addax Petroleum's performance in the first three months of 2008 continues to build upon our track record for delivering robust results, strong operational performance and excellent netbacks. Exploration and appraisal activity this year has been very encouraging and we are pleased to add further to our exploration portfolio through the acquisition of the Iroko exploration license in Cameroon. In the Kurdistan Region of Iraq, we are integrating the promising results of the two most recent step-out appraisal wells into a full field development plan and have commenced construction of an early production facility. Lastly, we have significantly expanded our ability to fund additional future growth through our first senior unsecured credit facility obtained successfully despite the difficult credit markets, which is a demonstration of the support for Addax Petroleum's strategy and growth potential in the financial community."
Selected Financial Highlights
<<
- Petroleum sales before royalties in the first quarter of 2008
amounted to $1,154 million, an increase of 84 per cent over petroleum
sales before royalties of $627 million in the first quarter of 2007.
The increase in petroleum sales before royalties was primarily driven
by a 66 per cent increase in the average crude oil sales price in the
first quarter of 2008 to $96.03 per barrel (/bbl) as compared to
$57.86/bbl realized in the first quarter of 2007 and a 12 per cent
increase in sales volumes between the same periods. Noteworthy in the
first quarter of 2008 is that oil production exceeded sales volumes
by 0.64 MMbbl, or the equivalent of approximately 7 Mbbl/d, resulting
in a large build of oil in inventory.
- Funds Flow From Operations for the first quarter of 2008 increased
78 per cent to $469 million ($3.02 per basic share) compared to
$263 million ($1.70 per basic share) in the first quarter of 2007.
- Net income in the first quarter of 2008 increased 204% to
$240 million ($1.54 per basic share) compared to $79 million ($0.51
per basic share) in the corresponding period in 2007.
- Capital expenditures increased by 57 per cent to $340 million in the
first quarter of 2008 from $216 million in the first quarter of 2007.
Development capital expenditures totaled $246 million in the first
quarter, an increase of 68 per cent over development capital
expenditure of $146 million in the first quarter of 2007. Exploration
and appraisal capital expenditures increased to $94 million in the
quarter, an increase of 34 per cent over exploration and appraisal
capital expenditures of $70 million in the first quarter of 2007.
- At the end of the first quarter 2008, bank debt totaled
$1,125 million, an increase of $150 million over the corresponding
quarter in 2007. Bank debt is currently drawn under a 5-year,
$1.6 billion senior secured term facility, with 4 years remaining.
- In late April 2008, the Corporation expanded its borrowing capacity
and entered into a 2-year, $450 million senior unsecured bank loan
facility. This loan facility is currently undrawn, but is intended to
provide funding for future growth opportunities through potential
acceleration of or increase in capital expenditure projects and/or
other acquisition opportunities.
The following table summarizes the selected financial highlights:
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Selected financial highlights Quarter ended
March 31
$ million unless otherwise stated 2008 2007 Change
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Petroleum sales before royalties 1,154 627 84%
Average crude oil sales price, $/bbl 96.03 57.86 66%
Funds Flow From Operations 469 263 78%
Net income 240 79 204%
Weighted average common shares outstanding
(basic, millions) 156 155 0%
Funds Flow From Operations per share ($/basic
share) 3.02 1.70 78%
Earnings per share ($/basic share) 1.54 0.51 202%
Weighted average common shares outstanding
(diluted, millions) 162 155 5%
Funds Flow From Operations per share
($/diluted share) 2.86 1.70 68%
Earnings per share ($/diluted share) 1.51 0.51 196%
Total assets 4,178 3,113 34%
Long-term debt, excluding convertible bonds 1,125 975 15%
Capital Expenditures - by Region
Nigeria (excluding deepwater) & Cameroon 261 165 58%
Gabon 66 31 113%
Kurdistan Region of Iraq 7 15 -53%
Deepwater Nigeria & JDZ 3 3 0%
Corporate 3 2 50%
Total 340 216 57%
Capital Expenditures - by Type
Development 246 146 68%
Exploration & appraisal 94 70 34%
Total 340 216 57%
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Selected New Business Highlights
- During the first quarter of 2008, the Corporation renegotiated an
amended production sharing contract for the Taq Taq license area in
the Kurdistan Region of Iraq, keeping the Corporation's economic and
operational interest materially unchanged. Early in the second
quarter of 2008, Addax Petroleum concluded one strategic acquisition
which increased the Corporation's exploration portfolio, offshore
Cameroon.
- New business highlights to date in 2008 include:
Kurdistan Region of Iraq
- as previously announced in February 2008, the Corporation signed
an agreement with the Kurdistan Regional Government amending the
production sharing contract it holds together with Genel Enerji in
respect of the Taq Taq license area in the Kurdistan Region of
Iraq. The purpose of the amendments was to bring the terms of the
Taq Taq production sharing contract into conformity with recently
enacted oil and gas legislation in the Kurdistan Region of Iraq.
Cameroon
- as previously announced in April 2008, Addax Petroleum acquired a
100% working interest in the Iroko exploration license area,
offshore Cameroon. The Societe Nationale des Hydrocarbures, the
national oil company of Cameroon, holds a back-in right of
30 per cent in case of a development. The Corporation is obligated
to pay a signature bonus of $3 million and undertake a minimum
work program valued at $18 million. There are no wells drilled on
Iroko but there is oil production nearby from the Pecten (Shell)-
operated Mokoko-Abana field complex. The Corporation is presently
undertaking an exploration program on the Ngosso license area
offshore Cameroon, after which it plans to start exploration
drilling on the Iroko license area.
Selected Exploration and Appraisal Highlights
- During the first quarter of 2008, Addax Petroleum had significant
exploration and appraisal success in its program offshore Nigeria and
in the Kurdistan Region of Iraq and also commenced its exploration
program offshore Cameroon. The Corporation also progressed its
exploration and appraisal portfolio in Gabon and the Joint
Development Zone and is planning for exploration and appraisal
activities later in the year.
- Exploration and appraisal highlights to date in 2008 include:
Gulf of Guinea Shallow Water (Nigeria and Cameroon)
- in OML137, two successful appraisal wells were drilled on the
Ofrima North discovery. The Ofrima-3A well confirmed the western
extension of the H42 oil reservoir discovered by the Ofrima-2 well
drilled in 2007 and the Ofrima-3 well discovered 62 feet of oil
and 92 feet of liquids-rich gas in deeper horizons. Development
planning studies for Ofrima North are currently underway;
- in OML123, two wells were successfully appraised at the Kita
Marine and Oron West fields, the results of which are presently
being incorporated into field development options. The ORW-C1AST
well successfully appraised an extension to the producing Oron
West field and the KTM-6 well discovery in March 2008 encountered
an aggregate gross oil column of 173 feet over four zones. The
Kita Marine discoveries lie in the northern part of the prolific
OML123 block offshore Nigeria in an area which has not previously
had production; and
- in Cameroon, the Corporation started its first exploration
drilling campaign. The campaign comprises drilling up to three
exploration wells in the Ngosso license area followed by an
exploration well in the recently-awarded Iroko license area. The
2008 Cameroon exploration drilling campaign is planned to be
completed during the second quarter.
Gulf of Guinea Deep Water (Nigeria and JDZ)
- the Corporation continued its evaluation of drilling locations in
the JDZ license areas and its efforts to secure a rig of
opportunity to commence drilling operations in the second half of
2008. In OPL291, the Corporation is planning to acquire 3D seismic
survey also in the second half of 2008.
Gabon
- the Corporation participated in the unsuccessful THAM-1
exploration well drilled by Sterling Energy to test the Admiral
prospect on the Themis Marin offshore license area. The Themis
Marin license was subsequently relinquished with all work
commitments completed. Onshore Gabon, the Corporation acquired
development and exploration seismic data in its operated Remboue
license area.
Kurdistan Region of Iraq
- in January 2008, the Corporation tested the TT-09 step-out
appraisal and development well on the Taq Taq field in the
Kurdistan Region of Iraq. The TT-09 well tested at an aggregate
oil rate of 16,170 bbl/d from two separate zones.
- in March 2008, the Corporation tested the TT-08 step-out appraisal
and development well on the Taq Taq field in the Kurdistan Region
of Iraq. The TT-08 well tested at an aggregate oil rate of
35,750 bbl/d from two separate zones.
Selected Operational Highlights
- Average gross working interest oil production in the first quarter of
2008 was 139,100 barrels per day (bbl/d) representing an increase of
approximately 20 per cent over the 2007 average production of
116,090 bbl/d. Average oil production in the first quarter of 2008
included 109,700 bbl/d from Nigeria and 29,400 bbl/d from Gabon
compared to a 2007 first quarter average production level of
97,880 bbl/d and 18,210 bbl/d, respectively.
- Development project highlights in the first quarter of 2008 include:
Nigeria
- drilled three new development wells which included one oil
production well and one water injection well in OML123 and one oil
production well in OML124;
- placed a total of two new oil production wells on production in
the quarter which were the two wells drilled in the quarter;
- in OML123, the Oron West South platform was installed while the
first of two platform substructures were installed on the Adanga
North Horst field and water injection pipelines were laid and
facilities commissioned;
Gabon
- drilled seven new development wells onshore of which five,
comprising four oil production wells and one gas injection well,
were in the Addax Petroleum operated Tsiengui field in the Maghena
license area and a further two oil development were wells in the
Shell-operated Koula field in the Awoun license area;
- placed a total of five new oil production wells on production in
the Tsiengui field in the quarter of which two were drilled in the
quarter and three were drilled in the previous quarter;
- continued ongoing surface facilities development at the onshore
Addax Petroleum operated Tsiengui and Obangue fields and the
Shell-operated Koula field, including the extension of the
Corporation's onshore oil export pipeline system, and at the
offshore non-operated Ebouri field;
Kurdistan
- commenced construction of an early production facility; and
- started trial production from the Taq Taq field at reduced rates
with intermittent local sales. The Corporation is targeting to
commence commercial oil production attributable to its working
interest in the second half of 2008.
- Operating netbacks in the first quarter of 2008 increased 72 per cent
to $72.49/bbl compared to $42.05/bbl in the first quarter of 2007.
Unit operating expenses in the first quarter of 2008 increased to
$8.09/bbl, an increase of 3 per cent over the 2007 level of $7.84/bbl
as the Corporation continues to face cost inflation pressures for the
provision of services.
The following table summarizes selected operational information:
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Selected operational highlights Quarter ended
March 31
2008 2007 Change
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Quarter average gross working interest oil
production (Mbbl/d)
Nigeria (offshore) 102.3 92.1 11%
Nigeria (onshore) 7.4 5.8 28%
Nigeria sub-total 109.7 97.9 12%
Gabon (offshore) 7.0 6.3 11%
Gabon (onshore) 22.4 11.9 88%
Gabon sub-total 29.4 18.2 62%
Total 139.1 116.1 20%
Prices, expenses and netbacks ($/bbl)
Average realized price 96.03 57.86 66%
Operating expense 8.09 7.84 3%
Operating netback 72.49 42.05 72%
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>>
Dividend
During the first quarter of 2008, the Corporation paid a dividend of CDN$0.10 per share. The Board of Directors of the Corporation declared a dividend of CDN$0.10 per share on May 2, 2008 which is payable on June 12, 2008 to shareholders of record on May 29, 2008. In accordance with Canada Revenue Agency Guidelines, dividends paid by the Corporation during the period are eligible dividends.
Recent Developments
Since the end of the first quarter of 2008, the Corporation made the following announcements:
- on April 3, 2008, the Corporation announced the acquisition of a
100 per cent interest in and operatorship of the Iroko exploration
license area, offshore Cameroon;
- on May 1, 2008, the Corporation announced the successful appraisal of
the Ofrima North discovery in OML137 offshore Nigeria.
In addition, during April 2008, a new two year loan facility was signed and underwritten for an amount of $450 million, which may increase to $500 million after syndication. This loan facility will be used to provide funding in relation to the acceleration of or increase in capital expenditure projects and/or other acquisition opportunities.
Outlook
The Corporation's production outlook for 2008 is in line with guidance provided to date. Addax Petroleum expects annual average working interest gross oil production for 2008 to be approximately 140,000 to 145,000 bbl/d from its Nigeria and Gabon operations.
Analyst Conference Call
Financial analysts are invited to participate in a conference call today Tuesday, May 6, at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. time with Mr. Jean Claude Gandur, President and Chief Executive Officer, Mr. Michael Ebsary, Chief Financial Officer and Mr. James Pearce, Chief Operating Officer. The media and shareholders may participate on a listen only basis. To participate in the conference call, please dial one of the following:
Toronto: 416 644 3424
Toll-free (Canada and the US): 1 800 732 6179
Toll-free (UK): 00 800 2288 3501
Toll-free (Switzerland): 00 800 2288 3501
A replay of the call will be available at (416) 640 1917 or (877) 289 8525, passcode 21269672 followed by the number sign until Tuesday, May 20, 2008.
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