Cobalt announced a net loss of $19.5 million, or $0.05 per basic and diluted share for the second quarter of 2011, compared to a net loss of $41.8 million, or $0.12 per basic and diluted share, for the second quarter of 2010.
Cash expenditures (excluding changes in working capital) for the quarter ended June 30, 2011 were approximately $22 million and about $33 million year-to-date. For the full year 2011, Cobalt expects to spend $325 to 400 million which includes the cash expenditures associated with Block 20 offshore Angola. The timing of expenditures in the second half depends primarily on when the Block 20 Production Sharing Agreement is signed and when Cobalt recommences Gulf of Mexico drilling activities.
Cash, cash equivalents and investments at the end of the second quarter were approximately $1.64 billion. This includes about $339 million designated for future operations held in escrow and collateralizing letters of credit, but excludes approximately $196 million in the TOTAL drilling fund for the Gulf of Mexico. Cobalt expects it is well-funded to execute on its planned exploration and appraisal program, including expenditures relating to Block 20 offshore Angola, through the end of 2013.
On April 15, 2011, Cobalt completed a registered underwritten offering of 35,650,000 shares of its common stock at a public offering price of $14.00 per share, resulting in proceeds of approximately $499 million before expenses.
On May 3, 2011, Cobalt announced that the national oil company of Angola, Sociedade Nacional de Combust•veis de Angola-Empresa Publica (Sonangol), had approved Cobalt's drilling plans for its two initial pre-salt exploratory wells, Bicuar #1 and Cameia #1, on Block 21 offshore Angola. Subsequent to the end of the second quarter, on July 19, 2011, Cobalt commenced its initial two well pre-salt exploratory drilling program on Block 21 offshore Angola by spudding the surface hole of the Bicuar #1 exploratory well. On July 20, 2011, after setting the 36" conductor casing and drilling approximately 210 meters of surface hole, Cobalt encountered an over pressured water sand resulting in a water flow with limited quantities of natural gas. No safety or environmental issues resulted from the incident. Cobalt is focused now on its abandonment procedures for the Bicuar #1 exploratory well surface location. Given the unique nature of encountering pressured water sands in Angolan waters, Cobalt has agreed with Sonangol that Cobalt will take its learnings from this incident and reexamine its shallow hazard analysis of proposed Cameia and Bicuar drilling locations before moving the drilling rig to Cameia or a different surface location on Bicuar.
With respect to Cobalt's U.S. Gulf of Mexico drilling program, Cobalt believes it has satisfied all of the remaining requirements of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) related to its North Platte #1 and Ligurian #2 applications for permit to drill (APD's), except for the submission of the U.S. Coast Guard Certificate of Compliance for the Ensco 8503 drilling rig, which cannot be obtained until the rig returns to the U.S. Gulf of Mexico. Cobalt does not anticipate any issues related to obtaining this routine U.S. Coast Guard certification and it expects that after its submission the BOEMRE will promptly issue the APD's for both the North Platte #1 and Ligurian #2 exploratory wells. Cobalt expects that the Ensco 8503 drilling rig will be returned to Cobalt in the U.S. Gulf of Mexico late in the third quarter of 2011. Upon its return, the submission of the U.S. Coast Guard Certificate of Compliance, and the issuance of the APD's for the North Platte #1 and Ligurian #2 exploratory wells, Cobalt plans to drill the Ligurian #2 exploratory well. After drilling the Ligurian #2 exploratory well, Cobalt plans to move the rig to the North Platte #1 well location to drill that prospect. Cobalt anticipates that each of the Ligurian #2 and North Platte #1 exploratory wells will take approximately six months to drill.
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