Addax Petroleum Corp. on Tuesday announced its results for the quarter ended March 31, 2007. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars.
Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said:
"We have had a very good start to 2007. Our first quarter financial performance has been strong, based on solid operating netbacks and operational performance that is delivering growth in line with our expectations. In addition to operational delivery, our exploration and appraisal results have been encouraging. Our efforts to demonstrate and realize value in our exploration portfolio, including on currently producing license areas, at Taq Taq and the deep water Gulf of Guinea, are progressing well. I am also very pleased to have recently concluded our first new business acquisition of 2007, which was in Gabon and complements our existing business there. I look forward to concluding our secondary listing on the London Stock Exchange in the near future, which I believe will be an important contribution to our objectives of maximizing value for our shareholders."
Selected Financial Highlights
- Petroleum sales before royalties in the first quarter of 2007 amounted to $627 million, an increase of 59 percent over petroleum sales before royalties of $394 million in the first quarter of 2006. The growth in petroleum sales before royalties arose from increased petroleum production and sales, partially offset by a 3 percent decline in average crude oil sales price to $57.86 per barrel (/bbl) as compared to $59.41/bbl realized in the corresponding period in 2006.
- Net income in the first quarter of 2007 was $79 million ($0.51 per share), an increase of 39 percent over net income of $57 million ($0.44 per share) in the first quarter of 2006.
- Funds Flow From Operations for the first quarter of 2007 increased 50 percent to $263 million ($1.70 per share) compared to $175 million ($1.36 per share) for the corresponding period in 2006.
- The Corporation's $1.0 billion acquisition facility was refinanced with a $1.5 billion five-year term facility, subsequently successfully syndicated and increased to $1.6 billion.
- The Corporation was added to the Standard & Poor ("S&P")/TSX Composite Index and the S&P/TSX Capped Energy Index, effective March 19, 2007.
Selected Operational Highlights
- Average working interest gross oil production in the first quarter of 2007 was 116 thousand barrels per day (Mbbl/d), an increase of 45 percent over first quarter 2006 average oil production of 80 Mbbl/d. Gabon contributed 18 Mbbl/d in the first quarter of 2007 (no contribution in the first quarter of 2006) and Nigeria production increased by 22 percent to 98 Mbbl/d compared to 80 Mbbl/d in the corresponding period in 2006.
- Capital expenditures increased by 20% to $216 million in the first quarter of 2007, up from $180 million in the first quarter of 2006, excluding new business acquisition considerations, farm-in fees and license signature fees. Development capital expenditures totaled $146 million in the first quarter of 2007, a decrease of 16 percent over first quarter 2006 development capital expenditure of $173 million. Exploration and appraisal capital expenditures increased to $70 million in the first quarter of 2007 from $7 million in the first quarter of 2006.
- Throughout the first quarter of 2007, the Corporation operated seven drilling rigs: three offshore Nigeria, one onshore Nigeria, two onshore Gabon - of which one was subsequently released - and one in the Kurdistan Region of Iraq. A second full-time land rig was contracted into Gabon at the end of the first quarter and is currently being assembled in readiness to start drilling during the current quarter.
- Development project highlights in the first quarter of 2007 include:
- development drilling activity comprised drilling six new
development wells, three on OML123, one on OML126 and two on
- of these six new wells, the OML123 and OML124 wells were placed on
production while the new OML126 development well is awaiting tie-
- ongoing surface facilities development at the Oron and Adanga
fields on OML123.
- three development wells were drilled on the Corporation's onshore
- a total of five new production wells were placed on production
comprising two of the three new wells drilled in the quarter, a
further two previously drilled onshore wells and one development
well in the non-operated offshore license area;
- ongoing surface facilities development at the Maghena and Etame
- Exploration and appraisal activity and highlights in the first quarter of 2007 include:
Gulf of Guinea Shallow Water (Nigeria and Cameroon)
- five exploration and appraisal wells were drilled offshore Nigeria
in the quarter, three on OML123 and two on OML126, resulting in
the discovery and successful appraisal of a new accumulation,
demonstrating extensions in two producing fields, and one
unsuccessful exploration and appraisal well;
- in OML123, the Antan-1X exploration well discovered a new
accumulation that encountered three oil-bearing reservoir
intervals with approximately 104 feet of aggregated net pay. One
of the three reservoir intervals was tested and flowed at a rate
of approximately 470 bbl/d of 15 degrees API oil. The true flow
potential of the interval was not reached because of sand control
measures implemented during the test. The Antan discovery was
successfully appraised by the Antan-2X well, a down-dip step-out
well approximately 0.8 kilometers from the Antan-1X well, which
encountered approximately 41 feet of net oil pay in aggregate; the
well confirmed the oil water contact in one of the Antan-1X well
intervals and discovered oil in two deeper intervals that were not
recorded by the Antan-1X well. The Antan-2X well was not tested;
- successful field extension appraisal wells were drilled on the
Ebughu and Okwori fields in OML123 and OML126, respectively.
Subsequently, three development wells have been drilled, two of
which are on production and one awaiting tie back.
- the fifth exploration and appraisal well, on the Nda West prospect
in OML126, was unsuccessful;
- the Corporation relinquished 50 percent of the OPL225 exploration
license area pursuant to the terms and conditions of the relevant
production sharing contract. OPL225 was subsequently renamed as
- in Cameroon, there has been no field or drilling activity. The
Corporation plans to start exploration drilling on the Ngosso
license area later in 2007 and drilling rig selection is on-going;
- one successful exploration and appraisal well was drilled on the
previously discovered but undeveloped onshore Autour field. The
well is presently suspended, awaiting flow testing;
- the Corporation, under the terms of the Panthere NZE license area
production sharing contract, relinquished the Mokabou and Pomarin
areas and retained the Autour area.
Gulf of Guinea Deep Water (Nigeria and JDZ)
- technical studies are ongoing to evaluate exploration prospect
- as reported on March 6, 2007, the Corporation has contracted the
Aban Abraham, a deep water drillship, to be available as early as
the second quarter of 2008 in the Corporation's deep water license
Kurdistan Region of Iraq
- as reported on March 1, 2007, the TT-05 well tested at an
aggregate rate of 26.6 Mbbl/d from two separate intervals;
- the TT-06 well was spudded approximately 3.6 kilometers north-
northwest of the TT-05 and presently the TT-06 well is being
prepared for flow testing, the results of which will be announced
following the completion of testing;
- recently, the TT-07 well was spudded approximately 2.2 kilometers
southeast of the TT-05 well location.
- Operating netbacks in the first quarter of 2007 increased by
2 percent to $42.05/bbl compared to $41.24/bbl in the first quarter
of 2006. Unit operating expenses increased to $7.84/bbl, an increase
of 10 percent over the first quarter 2006 level of $7.13/bbl. Unit
operating costs in the first quarter of 2007 reflect the relatively
high current unit operating cost associated with the Corporation's
operations in Gabon.
The Board of Directors of the Corporation has declared a dividend of CDN$0.05 per share for the first quarter of 2007. The dividend is payable on June 14, 2007, to shareholders of record on May 31, 2007. A dividend of CDN$0.05 per share was declared and paid in the first quarter of 2007 relating to the fourth quarter of 2006.
Since the end of the first quarter, the Corporation has made a number of announcements, including:
- On April 10, the Corporation announced the acquisition of a 50 percent interest in and operatorship of the Epaemeno exploration license area, onshore Gabon. The Epaemeno license area lies immediately north of the Corporation's Maghena and Awoun license areas; and
- On April 22, the Corporation announced its intention to undertake a secondary listing of its shares on the London Stock Exchange.
The Corporation's outlook for 2007 is in line with guidance provided to date. Addax Petroleum expects annual average working interest gross oil production to approximate 127 to 133 Mbbl/d from its Nigeria and Gabon operations.
The Corporation will host a management presentation to financial analysts on May 29, 2007 in London and intends to provide further guidance for 2007 and future years at that time.