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Coastal Energy Announces First Quarter 2013 Financial Results & Operations Update



Coastal Energy Announces First Quarter 2013 Financial Results & Operations
Update

HOUSTON, May 13, 2013 (GLOBE NEWSWIRE) -- Coastal Energy Company (the
"Company" or "Coastal Energy") (TSX:CEN) (AIM:CEO), an independent exploration
and production company with assets in Southeast Asia, announces the financial
results for the three months ended March 31, 2013. The functional and
reporting currency of the Company is the United States dollar.

Q1 2013 Financial Highlights

  * The Company reported Q1 total production of 23,163 boe/d, up from year ago
    levels of 22,773 boe/d. Offshore production totalled 20,460 bbl/d, a
    slight decrease from year ago levels of 21,031 bbl/d. Offshore production
    was impacted by several factors, including longer than expected completion
    times for the hydraulic fracturing program at Bua Ban South, delayed
    production from two horizontal wells at Bua Ban North due to the initial
    installation of "swelling packers" designed to reduce water production and
    the Songkhla A-10 well being down for a majority of the quarter awaiting
    pump replacement. Onshore production was 2,703 boe/d, up from 1,742 boe/d
    in the same period last year due to stronger gas demand in Thailand.
     
  * EBITDAX for Q1 2013 was $152.5 million, 19% higher than the $128.4 million
    recorded in Q1 2012. Revenue and EBITDAX were driven higher by increased
    lifting volumes. Crude oil inventory was approximately 188,115 barrels at
    March 31, 2013, the revenue from which will be recognized in the second
    quarter. 
     
  * Operating costs declined 8% year over year on a per barrel basis to $19.90
    / bbl as the Company realized the benefits of costs reductions related to
    the purchase of previously leased production facilities.
     
  * The Company announced successful discoveries at Songkhla A in two
    exploration wells which were drilled into previously untested fault blocks
    on the western side of the platform.

Operations Update

The Company recently completed the drilling of one exploration well at the
Songkhla M prospect and one appraisal/exploration well in the Bua Ban North
and Bua Ban Terrace Area.

Bua Ban Terrace

The Bua Ban Terrace A-01 well was drilled to a depth of 5,900 feet TVDSS.  The
well penetrated the Miocene interval within the existing Bua Ban North field. 
The Miocene contained 52 feet of net pay with 26% average porosity, which was
thicker than the 40 feet of prognosed pay.  The well then penetrated the Lower
Oligocene and Eocene intervals on the western side of the fault in the Terrace
area and encountered 7 feet of net pay in the Lower Oligocene reservoir with
16% porosity.  The Eocene contained 313 feet of net sand with an average
porosity of 18.2 %.  Very high gas readings persisted throughout drilling of
the Eocene sections.  Although, the majority of the zones in the Eocene were
water-bearing, there were several zones with log indications of high oil
saturation levels. These log readings, in conjunction with the pay zone in the
Lower Oligocene and high gas readings throughout the Eocene, further confirm
oil migration in the Terrace area. 

Songkhla M

The Songkhla M-01 well was drilled to a depth of 9,200 feet TVDSS.  The well
encountered an extensive section of excellent quality Miocene reservoirs which
were water bearing. The well also encountered 57 feet of net sand in the
Eocene reservoir with pervasive oil shows.  The Eocene sand section had
average porosity of 11%, which is below the Company's conventional
commerciality threshold. 

Randy Bartley, President & CEO of Coastal Energy commented:

"Coastal Energy had another successful quarter in the first three months of
2013. The second quarter has also started well with offshore production
averaging 22,800 bbl/d and total Company production averaging 25,700 boe/d
during the month of April. The Company drilled two successful exploration
wells at Songkhla A, making discoveries in two previously untested fault
blocks on the western side of the platform.

"The results of both exploration wells yielded positive data points for our
exploration portfolio.

"The Bua Ban Terrace well was drilled into the same Terrace fault block as the
previously drilled Bua Ban North A-02 well, which penetrated the Lower
Oligocene to the south of this location and contains a massive section of high
quality, water bearing Lower Oligocene sands. The encounter of Lower Oligocene
net pay in this well, combined with the A-02 results, points to a potential
stratigraphic trap in the Terrace fault block that is pinched out between the
Terrace A-01 well and the Bua Ban North A-02 well. 

"At Songkhla M, we encountered oil shows in both the Miocene and Eocene
intervals. The Miocene had high levels of oil saturation, providing further
confirmation of oil migration in this high potential section on the eastern
side of the Songkhla basin. The M prospect is located at the southern limit of
our existing legacy 3D survey. However, the 3D survey acquired last year
extends much further to the south and a trend of Eocene closures has been
identified over a 2000 acre area. Given our success in hydraulically
fracturing the Eocene interval with similar characteristics on the western
side of the basin we feel that we have identified a significant trend for
hydraulic fracture development in the Eocene."

The following financial statements for the Company are abbreviated versions.
The Company's complete financial statements for the three months ended March
31, 2013 with the notes thereto and the related Management Discussion and
Analysis can be found either on Coastal's website at www.CoastalEnergy.com or
on SEDAR at www.sedar.com. All amounts are in US$ thousands, except share and
per share amounts.

Three Months Ended March 31,                      2013         2012 
                                                               
Revenues and Other Income                                      
Oil sales                                         226,800      189,079
Royalties                                         (26,310)     (20,243)
Oil sales, net of royalties                       200,490      168,836
Reimbursement of expenses under Malaysia risk     2,285        --
service contract
Other income (Note 12)                            261          (10,171)
                                                  203,036      158,665
                                                               
Expenses                                                       
Production                                        42,933       36,210
Malaysia risk service contract                    2,285        -- 
Depreciation and depletion (Note 7)               23,305       20,044
Net profits interest (Note 13)                    1,926        -- 
General and administrative                        7,781        8,327
Debt financing fees                               528          281
Finance                                           1,215        1,006
Gains on disposal of property, plant and          (19)         -- 
equipment
                                                  79,954       65,868
                                                               
Net income before income taxes and share of       123,082      92,797
earnings from Apico LLC
                                                               
Share of earnings from Apico LLC (Note 8)         5,218        4,007
                                                               
Net income before income taxes                    128,300      96,804
                                                               
Income taxes (Note 15)                                         
Current                                           45,065       36,608
Deferred                                          30,239       11,703
                                                  75,304       48,311
                                                               
Net income and comprehensive income               52,996       48,493
                                                               
Net income and total comprehensive income                      
attributable to:
Shareholders of Coastal Energy                    52,079       48,135
Non-controlling interest                          917          358
                                                  52,996       48,493
                                                               
Net income per share:                                          
Basic (Note 14)                                   0.46         0.42
Diluted (Note 14)                                 0.45         0.40
                                                               
The accompanying notes are an integral part of these condensed interim        
consolidated financial statements.

                                                           
As at                                       March 31      December 31,
                                            2013          2012
                                             $             $ 
                                                           
Assets                                                     
Current Assets                                             
Cash                                         23,549        63,897
Restricted cash (Note 4)                     6,484         6,452
Accounts receivable (Note 5)                 145,710       56,848
Derivative asset (Note 11)                   131           132
Crude oil inventory                          9,204         15,611
Marine fuel inventory                       4,742         5,245
Prepaids and other current assets            1,557         628
Total current assets                         191,377       148,813
                                                           
Non-Current Assets                                         
Exploration and evaluation assets (Note 6)   62,921        118,350
Property, plant and equipment (Note 7)       688,724       560,493
Investment in and advances to Apico LLC      63,144        60,266
(Note 8)
Deposits and other assets                    6,271         6,271
Total non-current assets                     821,060       745,380
Total Assets                                 1,012,437     894,193
                                                           
Liabilities                                                
Current Liabilities                                        
Accounts payable and accrued liabilities     247,216       217,757
(Note 9)
Current portion of long-term debt (Note 11)  34            34
Current portion of derivative liabilities    973           1,372
(Note 11)
Total current liabilities                    248,223       219,163
                                                           
Non-Current Liabilities                                    
Long-term debt (Note 11)                     95,594        95,066
Non-current portion of derivative            683           502
liabilities (Note 11)
Derivative liability - Warrants (Note 10)    3,596         3,784
Deferred tax liabilities                     128,662       98,423
Decommissioning liabilities                  48,302        46,726
Total non-current liabilities                276,837       244,501
                                                           
Shareholders' Equity (Note 14)                             
Common shares                                215,141       213,260
Contributed surplus                          20,269        18,940
Warrants                                                   
Retained earnings                            245,902       193,877
Total Shareholders' Equity                   481,312       426,077
Non-controlling interest                     6,065         4,452
Total equity                                 487,377       430,529
Total liabilities and equity                 1,012,437     894,193
                                                           
Commitments and contingencies (Note 17)                                       
                                                           
The accompanying notes are an integral part of these condensed interim
consolidated financial statements.

                                                                   
Three Months Ended March 31,                         2013          2012 
Operating activities                                               
                                                                   
Net income                                           52,996        48,493
Adjustments:                                                       
Share of earnings from Apico LLC                     (5,218)       (4,007)
Unrealized (gain) loss on derivative instruments     (217)         4,007
Depletion and depreciation                           23,305        20,044
Finance expenses                                     1,215         1,006
Amortisation of debt financing fees                  528           281
Share-based compensation                             2,484         2,991
Deferred income taxes                                30,239        11,703
Unrealized foreign exchange (gain) loss              (1,020)       92
Gains on disposal of property, plant and equipment   (19)          --
Income taxes paid                                    (6,984)       --
Interest received                                    27            2
Interest paid                                        (1,118)       (721)
Dividends received from Apico LLC                    2,340         --
                                                                   
Change in non-cash working capital:                                
Accounts receivable                                  (88,862)      (15,537)
Inventory                                            6,910         (5,476)
Prepaids and other current assets                    (929)         748
Accounts payable and accrued liabilities             (6,846)       (19,357)
Current income taxes payable                         44,974        36,608
Cash flow provided by operating activities           53,805        80,877
                                                                   
Financing Activities                                               
Issuance of common shares, net of issuance costs     1,288         992
Cash settlement of restricted stock units            (156)         --
Borrowings under long-term debt                      15,000        --
Repayment of long-term debt                          (15,000)      (30,000)
Loan arrangement fees                                --            (746)
Distributions to non-controlling interest            (1,293)       --
Contributions from non-controlling interest          1,989         --
Cash flow provided by (used in) financing            1,828         (29,754)
activities
                                                                   
Investing Activities                                               
(Increase) decrease in restricted cash               (32)          22,036
Expenditure on property, plant and equipment         (95,972)      (45,229)
Acquisition of increased ownership interest in       --            (9,250)
Apico LLC
Proceeds from disposal of property, plant and        533           --
equipment
Cash flow used in investing activities               (95,471)      (32,443)
                                                                   
Effect of exchange rate changes on cash              (510)         (775)
                                                                   
(Decrease) increase in cash                          (40,348)      17,905
Cash - Beginning of period                           63,897        22,995
Cash - End of period                                 23,549        40,900
                                                                   
The accompanying notes are an integral part of these condensed interim
consolidated financial statements.

Randy Bartley, President and Chief Executive Officer of the Company and a
member of the Society of Petroleum Engineering and Jerry Moon, Vice President,
Technical & Business Development, a member of the American Association of
Petroleum Geologists, a Licensed Professional Geoscientist and a Certified
Petroleum Geologist in the state of Texas, have reviewed the contents of this
announcement.

Additional information, including the Company's complete competent person's
report may be found on the Company's website at www.CoastalEnergy.com or may
be found in documents filed on SEDAR at www.sedar.com.

This statement contains 'forward-looking statements' as defined by the
applicable securities legislation. Statements relating to current and future
drilling results, existence and recoverability of potential
hydrocarbon reserves, production amounts or revenues, forward capital
expenditures, operation costs, oil and gas price forecasts and similar matters
are based on current data and information and should be viewed as
forward-looking statements. Such statements are not guarantees of future
results and are subject to risks and uncertainties beyond Coastal Energy's
control. Actual results may differ substantially from the forward-looking
statements.

CONTACT: Enquiries:
         Coastal Energy Company
         Email: investor@CoastalEnergy.com
         +1 (713) 877-6793
        
         Strand Hanson Limited (Nominated Adviser)
         Rory Murphy / Andrew Emmott
         +44 (0) 20 7409 3494
        
         Macquarie Capital (Europe) Limited (Broker)
         Jeffrey Auld
         +44 (0) 20 3037 2000
        
         FirstEnergy Capital LLP (Broker)
         Hugh Sanderson / Travis Inlow
         +44 (0) 20 7448 0200
        
         Buchanan
         Tim Thompson / Ben Romney
         +44 (0) 20 7466 5000

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