Petro Andina Resources Inc. announces its operating and financial results for the year ended December 31, 2008. Following the Company's announcements of record oil production on January 20, 2009 and record reserves growth on February 25, 2009, Petro Andina is pleased to announce record net income and funds flow from operations for the year ended December 31, 2008 and the fourth quarter of 2008.
The Company's net income for 2008 was $34.8 million ($0.82 per share fully diluted), compared to a net loss per fully diluted share of $0.18 for 2007. For the three months ended December 31 (fourth quarter) net income was $0.51 per fully diluted share, an increase of 168 percent from the previous quarter of 2008 and compared to $0.01 per fully diluted share in the comparative quarter of 2007.
Funds flow from operations per fully diluted share increased to $2.43 for 2008 compared to $1.01 per fully diluted share for 2007. Funds flow from operations per fully diluted share for the fourth quarter of 2008 was $0.97, for a quarter on quarter increase of 80 percent.
Sales volumes for 2008 averaged 12,089 barrels of oil equivalent per day (boe/d), a 100 percent increase from 2007. Sales volumes in the fourth quarter averaged 15,007 boe/d, for a quarter on quarter increase of 21 percent. Following commissioning of the atmospheric tank treatment facility, daily production volumes for the first quarter of 2009 have been consistent between 15,500 and 16,000 boe/d. Petro Andina is currently utilizing three drilling rigs of which two are working in the development core area and one is allocated to exploration. The water handling facility expansion is on schedule to be commissioned in the second quarter of 2009.
Operating netbacks increased to $30.10 per boe, compared to $25.24 per boe in 2007. The principal driver behind the increase in operating netbacks was the decrease in production expenses. Production expenses averaged $9.24 per boe (US$8.66 per boe) for 2008 and $8.26 per boe (US$6.80 per boe) in the three months ended December 31, 2008.
The Company increased its year-end December 31, 2008 proved reserves to 20.2 million boe (a 63 percent increase over 2007 reserves) and proved plus probable reserves to 32.3 million boe (a 40 percent increase over 2007 reserves). Petro Andina increased proved plus probable reserves volumes per basic share (using the number of basic shares outstanding at year-end) to 0.77 barrels per share at December 31, 2008 from 0.58 barrels per share at year-end 2007. Reserves value per fully diluted share (using the weighted average number of fully diluted shares outstanding during the year) is calculated at $9.49 reflecting proved plus probable reserves discounted at 10 percent after tax. This represents a 75 percent increase from year-end 2007 reserves values per fully diluted share.
Finding and development (F&D) costs for 2008 were $10.85 per boe, calculated using proved plus probable reserve additions and including future development capital. Cumulative F&D costs, since incorporation of the Company in 2003, calculated on the same basis were $11.05 per boe. The Company's recycle ratio calculated using the 2008 F&D costs per boe and the fourth quarter 2008 operating netback of $36.23 per boe is approximately 3.3 times.
Petro Andina expanded and diversified its opportunity base significantly in 2008. Subject to the final contract execution in Colombia and Trinidad & Tobago, Petro Andina will have a geographically and fiscally diverse exploration portfolio.
The Company exited 2008 in a strong financial position. Working capital was $41.1 million. Long-term debt of $37.0 million represents 0.2 times debt to annualized fourth quarter funds flow from operations. In addition to strong operating and financial results, Petro Andina bought back 814,900 shares at an average price of $5.03 per share pursuant to its normal course issuer bid program.
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