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pe ER 10 PÅ 08 1Q INDTJENING, STÆRK VÆKST OG MED OLIEPRISEN SIDEN GENNEMSNITTET FOR 1Q ER INDTJENINGEN NOK NÆSTEN 50% HØJERE I 2Q
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Arawak announces first quarter results
Thursday May 15, 9:30 am ET
TSX TRADING SYMBOL: ABG
TORONTO, May 15 /CNW/ - Arawak Energy Limited the independent oil and gas company with exploration, development and production in Kazakhstan, Russia and Azerbaijan, today announces its results for the quarter ended March 31, 2008.
HIGHLIGHTS: (In US dollars unless otherwise stated)
- Net income in the first quarter of 2008 increased to $8.5 million from
$1.3 million in the first quarter of 2007
- Earnings per share (basic and diluted) increased to 4.9 cents from
0.7 cents
- Funds from operations were $16.1 million in the first quarter of 2008,
up 83% from the first quarter of 2007 with capital expenditure of
$10.6 million excluding acquisitions.
- Average production was 11,948 boepd, up 31% from 9,088 bopd in the
first quarter of 2007
- Further drilling successes in the Akzhar block in Kazakhstan and North
Irael in Russia which extend the boundaries of the oil producing areas
- Evaluation work is continuing with 359 sq km of 3D and 407 km of 2D
seismic from Russia and Azerbaijan being processed and interpreted,
and a further 1,000 km of 2D and 50 sq km 3D seismic is planned to be
acquired in 2008 in Russia and Kazakhstan to further delineate
prospectivity of the Company's exploration potential.
FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
For the three months ended March 31 2008 2007(2) 2006(2)
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Crude oil sales $66,580 $35,804 $27,719
Net income $8,473 $1,268 $5,292
Per share - basic $0.049 $0.007 $0.031
Per share - diluted $0.049 $0.007 $0.030
Funds from operations(1) $16,068 $8,760 $10,590
Per share - basic $0.092 $0.051 $0.061
Per share - diluted $0.092 $0.051 $0.062
Capital expenditure $10,563 $7,700 $9,627
Shareholders' equity $174,586 $130,042 $115,543
Weighted average shares - basic 173,892 173,392 173,039
Weighted average shares - diluted 174,276 174,476 174,486
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(1) Funds from operations is a non-GAAP measure that represents cash
generated from operating activities before changes in non-cash
working capital.
(2) Certain comparative figures have been restated to conform to the
current financial statement presentation.
OPERATIONAL HIGHLIGHTS
For the three months ended March 31 2008 2007
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Production - boe 1,087,237 817,983
Average daily production - boe 11,948 9,088
Sales - boe 1,003,587 826,973
Revenue and expenses per boe sold
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Crude oil and gas sales $66.34 $43.30
Interest and other income $0.69 $0.36
Royalties and taxes ($14.45) ($10.29)
Production costs ($9.01) ($4.87)
Transportation and selling expenses ($5.44) ($4.98)
Net operating income $38.13 $23.52
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REVIEW OF Q1 2008
Arawak Energy Limited ("Arawak" or the "Company") enjoyed an excellent first quarter of 2008 with production from Kazakhstan, Russia and Azerbaijan averaging 11,948 barrels of oil equivalent per day ("boepd"), up 31% from 9,088 barrels of oil per day ("bopd") in the first quarter of 2007 and up 1% from 11,775 boepd in the fourth quarter of 2007.
In Kazakhstan, where the Company has a 100% interest in six blocks, the aggressive 2007 drilling programme has wound down over the first quarter of 2008. A further eight wells were drilled at Akzhar, the largest of the Company's fields. Seven of these wells were exploration or appraisal wells and of these, five have been completed as commercial producers, including well 92, which has proved up oil in multiple horizons 1.7 km from the nearest producing well. Work will now focus on the preparation of the Technical Scheme of Development ("TSD"), needed to facilitate the envisaged transition from the contractual exploration phase to the production phase. On completion of the TSD, intensive development drilling can commence. Similarly, no further drilling took place in the Company's Besbolek field as the Company is in the advanced stage of preparation of the TSD, which is needed to facilitate the transition to the contractual production phase. The Company is now producing at less than capacity at both Akzhar and Besbolek fields due to the regulatory restraints inherent in the exploration phase, which will be lifted in the production phase. The new oil processing facility for Besbolek is now complete and the Company's own transfer station is in the process of being commissioned, allowing direct injection of Besbolek crude to the main KazTransOil pipeline.
At Alimbai, the last of five exploration wells will be drilled in the second quarter, and so far oil productive sands have been encountered in three of the four exploration wells drilled. The successful exploration wells are being progressively tested, zone by zone. Test production from Alimbai is currently around 300 bopd, although none of the thickest and most prospective Baremian intervals have yet been tested. Once the testing programme has been completed, the wells will be shut-in in accordance with regulations until the start of the production phase. The next phase of development will be a $4.0 million seismic survey, comprising approximately 200 line km 2D and 27 sq km 3D, which will be shot later this year. A seismic survey will also be acquired at the Company's large East Zharkamys III exploration block and at Tamdykol, the new exploration block that was acquired in May 2008. Survey work on the Akzhar-Kenkiyak pipeline has commenced, and construction is expected to commence in the third quarter.
In Russia, the Company successfully drilled into a new pool in the North Irael block, proving up additional reserves. The Company has a 50% interest in this block and is the operator. The successful well 64 is now flowing approximately 270 bopd from a deeper horizon than previously encountered on the block. The Company will shortly move uphole and test the main productive horizon. An application to drill an additional well in the new pool is currently in process with the regulatory authorities. 81 sq km of 3D seismic data is now being processed prior to interpretation later in the second quarter and further drilling will follow later in the year. A 33 sq km 3D seismic shoot has been completed on the Company's newly acquired 100% owned South Sotchemyu block, with interpreted maps expected by mid year. Additional 2D seismic will be shot in the winter of 2008/09. At Sotchemyu-Talyu, where the Company also has a 50% interest and is the operator, side-track wells were drilled for the first time using our own drilling rig. The first such side track well is flowing 375 bopd. 120 km of 2D seismic is expected to be acquired later in the year over the Company's 100% owned Kymbozhyuskaya exploration block.
In Azerbaijan, Southwest Gobustan, the small quantities of oil and gas production are being progressively shut down due to water handling problems. These issues will be addressed in conjunction with a new field development plan, which will be produced after completion of interpretation of the 2D and 3D seismic survey over the 3 blocks.
Sales volumes rose 21% to 1,003,587 barrels from 826,973 barrels in the first quarter of 2007 and declined 13% from 1,156,232 barrels in the last quarter of 2007 due to a reduction in inventory in the fourth quarter of 2007. The average realised selling price in the first quarter of 2008 was $66.34, compared with $43.30 in the first quarter of 2007.
Oil and gas sales revenues were $66.6 million in the first quarter of 2008 compared with $35.8 million in the first quarter of 2007 and $79.6 million in the last quarter of 2007. The net income in the first quarter of 2008 was $8.5 million compared with $1.3 million in the first quarter of 2007 and $21.9 million in the last quarter of 2007. However, the net income for the fourth quarter of 2007 included certain one-off reductions in the tax charge for the year following a review of the group's tax position, whilst operating costs in the first quarter of 2008 include $3.0 million incurred in relation to the re-domiciliation and potential London listing. Also in the first quarter of 2008, both of our major producing fields in Kazakhstan moved to the Excess Profit Tax environment, following increases in production and profit. Current income tax in the first quarter of 2008 was $14.1 million compared to $5.9 million in the first quarter of 2007 with $13.0 million accounted for in Kazakhstan. Funds from operations were $16.1 million in the first quarter of 2008, an increase of 83% over the first quarter of 2007 and capital expenditure was $10.6 million excluding acquisitions.
In the first quarter of 2008, the Azerbaijani operations contributed a loss of $0.2 million to the consolidated results of Arawak. Prior to commencement of commercial operations in the second quarter of 2007, Arawak reflected the result of its Azerbaijani operations through their carrying value in Arawak's consolidated balance sheet.
Arawak's unaudited consolidated financial statements and related Management's Discussion and Analysis for the three months ended March 31, 2008, have also been filed. Copies of these documents may be accessed electronically on the website for the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and Arawak's website at www.arawakenergy.com.
Arawak's common shares are listed for trading on the TSX under the symbol "ABG". The Company is engaged in the exploration, development and production of oil and natural gas in Kazakhstan, Russia and Azerbaijan. The Company's four producing fields and two exploration blocks in Kazakhstan are held through its 100% wholly-owned subsidiary Altius Energy Corporation ("Altius"). Altius' main producing field is Akzhar, extended in 2006 from 3.8 to 71.5 square km, with smaller fields at Besbolek, Karataikyz and Alimbai. The two exploration blocks East Zharkamys III and Tamdykol are also situated in western Kazakhstan. Arawak's assets in Russia are held through ZAO PechoraNefteGas ("PNG") and LLC NK Recher-Komi ("Recher-Komi") in which Arawak has a 50% interest with the remaining interest being held by Lundin Petroleum AB. Also in Russia, Arawak holds a 100% interest in the Kymbozhyuskaya exploration block and in the South Sotchemyu appraisal block. In the Azerbaijan Republic, the Company's asset is its interest in the South West Gobustan Exploration Development and Production Sharing Agreement (the "EDPSA"). Commonwealth Gobustan Limited ("CGL"), in which Arawak has a 37.17% interest, holds an 80% interest in the EDPSA with the remaining 20% owned by SOCAR Oil Affiliate.
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