Coastal Energy Company (the "Company" or "Coastal Energy") (TSX-V:
CEN) (AIM: CEO) announces the financial results for the quarter
ended September 30, 2010. The functional and reporting currency of
the Company is the United States dollar.
Third Quarter 2010 Highlights
-- Average total Company production of 11,795 boe/d; including average
offshore production of 10,065 bbl/d
-- EBITDAX of $44.5 million, or $0.39 per fully diluted share; up 49%
sequentially and over 550% YoY
-- Net income of $9.2 million, or $0.08 per fully diluted share
-- First production from the Bua Ban field in the Gulf of Thailand
-- The closing of a $80MM senior secured revolving credit facility
Operational Highlights
During the third quarter Coastal Energy completed the first
development phase of the Bua Ban field in the Gulf of Thailand. The
field is online and is producing approximately 4,000 bopd.
Exploration results were positive as two of the wells encountered
productive sands in the Miocene, a first in the Songkhla basin. Two
other wells encountered a significant oil column in the Eocene
reservoir, albeit with tight porosity and permeability. The Company
is planning a fracture test of these wells in December to attempt
to make the Eocene reservoir commercially productive.
Following development drilling at Bua Ban, the Company began
appraisal drilling into the Lower Oligocene Wedge and Eocene
reservoirs at Songkhla. The first well reached TD in mid-November
and encountered thicker than expected pay zones in both the Lower
Oligocene and Eocene. Two more appraisal wells are planned in the
coming weeks. The Company then plans to begin testing its high
impact exploration targets at Bua Ban North.
Randy Bartley, President and CEO of Coastal Energy,
commented:
"The third quarter of 2010 was a successful one for Coastal. We
delivered record levels of EBITDAX and net income due to higher
production volumes from our offshore fields. The completion of the
first phase of development was another milestone for the Company.
The fourth quarter is off to a successful start with the drilling
of a successful appraisal well at Songkhla. We expect further
success as we continue to appraise the Oligocene Wedge and Eocene
reservoirs over the next month.
"The Company is entering an exciting time with several high
impact exploration prospects scheduled for testing over the next
several months. As we move forward through the remainder of 2010,
we will continue to strive for further success in the exploration
and appraisal of our offshore assets."
The Company plans to host a conference call to discuss its Q3
2010 results on Friday, November 19, 2010 at 11:30 AM Eastern time.
The dial-in number is 800.281.7970 in the USA or +1.913.312.1414
internationally. The conference ID is 2241640.
The following financial statements for the Company are
abbreviated versions. The Company's complete financial statements
for the three months and nine months ended September 30, 2010 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.
CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND
DEFICIT
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Revenues
Oil and natural gas 68,688 21,205 160,362 57,422
Royalties (6,828) (1,430) (13,632) (3,851)
(Loss) gain on derivative
risk management contracts
(Note 5) - 128 (66) (1,795)
Interest income 1 6 4 22
--------- --------- --------- ---------
61,861 19,909 146,668 51,798
--------- --------- --------- ---------
Expenses
Production 16,329 10,936 34,965 23,788
General and administrative 4,336 5,029 12,228 11,432
Foreign exchange loss 2,198 240 2,651 1,637
Interest (Notes 4 and 5) 367 796 1,064 3,162
Debt financing fees 23 323 266 1,249
Depletion, depreciation and
accretion 21,410 5,382 46,316 16,238
Settlement (Note 3) - - - 2,366
--------- --------- --------- ---------
44,663 22,706 97,490 59,872
--------- --------- --------- ---------
Net income (loss) before taxes,
earnings from significantly
influenced investee and
non-controlling interest 17,198 (2,797) 49,178 (8,074)
Income tax 10,708 - 29,575 -
--------- --------- --------- ---------
Net income (loss) before
earnings from significantly
influenced investee and
non-controlling interest 6,490 (2,797) 19,603 (8,074)
Earnings from significantly
influenced investee (Note 2) 2,491 2,621 8,223 5,886
--------- --------- --------- ---------
Net income (loss) before
non-controlling interest 8,981 (176) 27,826 (2,188)
Non-controlling interest
(Note 9) 247 65 197 65
--------- --------- --------- ---------
Loss from continuing operations
Net loss from discontinued
operations (Note 18)
--------- ---------
Net income (loss) and
comprehensive income (loss)
attributable to shareholders 9,228 (111) 28,023 (2,123)
Retained earnings (deficit),
beginning of period 2,093 (18,599) (16,702) (16,587)
--------- --------- --------- ---------
Retained earnings (deficit),
end of period 11,321 (18,710) 11,321 (18,710)
--------- --------- --------- ---------
Foreign exchange loss
Basic earnings (loss) per share
(Note 8) 0.08 (0.00) 0.26 (0.02)
Diluted earnings (loss) per
share (Note 8) 0.08 (0.00) 0.25 (0.02)
========= ========= ========= =========
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2010 2009
-------------- -------------
Assets
Current assets
Cash and cash equivalents 19,865 21,229
Restricted cash 7,379 3,829
Accounts receivable 21,392 6,111
Derivative asset - 66
Inventory 6,771 5,310
Prepaids and other current assets 173 526
-------------- -------------
55,580 37,071
Investment in and advances to Apico LLC 53,152 55,225
Property, plant and equipment 311,521 233,014
Deposits and other assets 296 299
-------------- -------------
Total assets 420,549 325,609
============== =============
Liabilities
Current liabilities
Accounts payable and accrued liabilities 59,757 31,325
Deferred income - 23,060
Income taxes payable 31 38
Amounts due to shareholder - 5,164
Current portion of long-term debt 134 10,266
-------------- -------------
59,922 69,853
Long-term debt 56,113 24,284
Asset retirement obligations 10,827 2,809
Future income tax liability 59,869 27,695
-------------- -------------
Total Liabilities 186,731 124,641
-------------- -------------
Commitments and contingencies (Note 12)
Non-controlling interests 6,170 5,617
-------------- -------------
Shareholders' equity
Share capital 200,816 198,121
Contributed surplus 15,432 13,779
Warrants 79 153
Retained earnings (deficit) 11,321 (16,702)
-------------- -------------
Shareholders' equity 227,648 195,351
-------------- -------------
Total liabilities, non-controlling interests,
and shareholders' equity 420,549 325,609
============== =============
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
Operating activities
Net income (loss) for the period 9,228 (111) 28,023 (2,123)
Distributions from significantly
influenced investee 6,142 2,710 10,296 4,516
Items not involving cash
Depletion, depreciation and
accretion 21,410 5,382 46,316 16,238
Impairment - - - 1,765
Future income taxes 10,726 - 29,575 -
Income applicable to
non-controlling interest (247) (65) (197) (65)
Unrealized foreign exchange
(gain) loss 1,666 165 2,508 867
Stock based compensation 720 2,809 3,871 4,955
Issuance of warrants with notes
payable - - - 294
Earnings from significantly
influenced investee, net of
taxes (2,491) (2,621) (8,223) (5,886)
Unrealized loss (gain) on
derivative instrument - (128) 66 1,668
(Gain) loss on sale of assets
Change in non-cash working
capital (41,238) 21,600 (28,496) 25,633
-------- -------- -------- --------
5,916 29,741 83,739 47,862
-------- -------- -------- --------
Investing activities
Investment in and advances to
Apico LLC
Investment in and advances to
Apico LLC - - - (4,516)
(Increase) decrease in restricted
cash (4,342) (349) (3,550) 321
Purchase of property, plant and
equipment (10,970) (12,631) (100,834) (45,979)
Proceeds from sale of property
and equipment
Contributions from
non-controlling interest partner - 2,635 750 2,635
Other - - (6) (86)
-------- -------- -------- --------
(15,312) (10,345) (103,640) (47,625)
-------- -------- -------- --------
Financing activities
Issuance of shares for cash 166 (49) 2,052 15,369
Borrowings under long-term debt 58,727 - 58,727 1,620
Transaction costs of obtaining
credit facility (2,521) - (2,521) -
Repayments of long-term debt (28,571) (2,371) (34,550) (10,207)
Borrowings under amounts due to
shareholder - - - 1,000
Repayment of amounts due to
shareholder (3,161) (1,157) (5,164) (2,278)
Proceeds from issuance of notes
payable - - - 15,000
Repayments of notes payable - (2,949) - (7,021)
-------- -------- -------- --------
24,640 (6,526) 18,544 13,483
-------- -------- -------- --------
Net effect of foreign exchange on
cash held in foreign currencies (26) 27 (7) 42
-------- -------- -------- --------
Change in cash and cash equivalents 15,218 12,897 (1,364) 13,762
Cash and cash equivalents,
beginning of period 4,647 7,299 21,229 6,434
-------- -------- -------- --------
Cash and cash equivalents, end of
period 19,865 20,196 19,865 20,196
======== ======== ======== ========
Cash and cash equivalents consists
of:
Cash 19,865 20,196 19,865 20,196
======== ======== ======== ========
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.
These securities have not been registered under United States
Securities Act of 1933 (the "US Securities Act") or the securities
laws of any state and may not be offered or sold in the United
States or to US persons (as defined in Regulation S under the US
Securities Act) unless an exemption from registration is
available.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
This news release is not for dissemination in the United States
or through United States newswire services
Enquiries: Coastal Energy Company Randy L. Bartley Chief
Executive Officer +1 713 877 6705 William C. Phelps Chief Financial
Officer +1 713 877 6727 Email: Email Contact Strand Hanson Limited
(Nominated Adviser) +44 (0) 20 7409 3494 Rory Murphy Paul Cocker
Stifel Nicolaus Weisel (Broker) +44 (0) 20 3205 3615 Paul Colucci
Macquarie Capital (Europe) Limited (Broker) +44 (0) 20 3037 2000
Ben Colegrave Paul Connolly Buchanan Communications +44 (0) 20 7466
5000 Tim Thompson Catherine Breen Katharine Sutton
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