Pacific Rubiales Reports 2009 Results, Reserves
Pacific Rubiales announced today the release of its audited consolidated financial results for the year ended December 31, 2009, together with its Management's Discussion and Analysis, Annual Information Form and its 2009 Statement of Reserves, Form 51-101F1.
The company has announced an increase in revenues of over $60 million to $639.2 million compared to the prior year figure, and also an increase in EBITDA to $275.5 million. These increases occurred despite the sharp decline in international oil prices (WTI decreased by 38%), and are driven by the significant increase in net production sold of 56% and an important reduction in costs per barrel of 26%.
During the year, the company also increased its 2P reserves (net after royalties) to 280.6 million barrels of oil equivalent (boe), an increase of 34%, representing 1.3 barrels of reserves per outstanding share by the end of the year. This is primarily a result of an intensive exploration campaign with a success rate of 86%, with 19 successful wells drilled out of 22.
Ronald Pantin, Chief Executive Officer, commented: "The outstanding financial results achieved in 2009 demonstrate our position as the premier independent E&P company in Latin America and the second-largest crude oil producer in Colombia. I am particularly pleased with these results as they were achieved in a difficult environment for the oil and gas industry, which was adversely impacted by the downturn in global economic activity and resulted in a significant decline in crude oil prices. I have nothing but the highest praise to offer to all our employees for making this year a successful one under such challenging conditions. Given the success of our operating and exploration activities during the first quarter of this year, as well as our ambitious capital expenditure program for 2010, we look forward to achieving similarly outstanding results in this fiscal year."
The results for the year ended December 31, 2009 underline the strength of the company's operational activity, its capacity to increase production and commitment from management to deliver robust financials. Management is focused on realizing challenging operational objectives while continuing the company's ambitious exploration and production investment program. This was achieved despite the fact that the oil and gas industry was adversely impacted in 2009 by the downturn in the global economy which had resulted in a significant decline in crude oil prices, with signs of recovery appearing only towards the end of the year. The average WTI NYMEX price for the year was $62.09 per barrel (bbl) in comparison with $99.92/bbl in 2008, which represents a reduction of 38%. As a result, the average combined realized oil and gas sales price for the company for the year ended December 31, 2009 decreased to $49.51 per boe from $69.98 per boe in 2008, representing a reduction of 29%. This last figure demonstrates how the company was able to execute, through its trading and commercial initiatives, better than most.
The increase in gross operated production of the company during the year was a significant achievement, averaging 82,887 boe per day (boe/d), which is 36,123 boe/d (77%) greater than operated production for 2008. This growth in operated production came mainly through the increase in production at the Rubiales heavy oil field. As of March 15, 2010, the company's total operated production has exceeded 135,000 boe/d for all its fields, which makes the company the fastest growing oil and gas company in Colombia. As a consequence of this, and of management's commitment to control costs while increasing production, production costs per barrel have continued to decrease, showing a 26% reduction over the same period last year.
In the execution of its commercial strategy, the company continued exporting its oil production to its most attractive international markets (USA, Canada, Caribbean), while maintaining a presence in the local market with direct sales to the bunker and industrial sectors. During 2009, the company exported 8,625,955 barrels of crude oil, mostly to refineries in the US, and sold 1,603,363 barrels to the Colombian domestic market.
The company increased revenues by 10% to $639.2 million as compared to $579.1 million in 2008 despite lower prices for oil and gas during 2009. This was the consequence of the significant increase in production and the optimization of marketing mentioned above. Although this operational success enabled the company to increase revenues, net income was impacted by a number of non-cash charges, resulting in a net loss for the year of $154 million. These non-cash financial charges are: foreign exchange loss associated with future income tax liabilities; unrealized loss related to the fair value of the risk management contracts outstanding as of the end of 2009; and interest accruals related to the financing facilities used for the development of the oil infrastructure to increase the production capacity in the Rubiales field.
The company continues to move forward on its established investment plan, including the accelerated execution of the development plans for Rubiales and other fields. The official inauguration of the Oleoducto de los Llanos Orientales pipeline by the President of Colombia, Mr. Alvaro Uribe, on September 14, 2009, marked the beginning of operations of the most significant oil infrastructure project built in Colombia in a decade. It will allow for the development of the Rubiales field to its full potential, the leveraging of Quifa and the company's surrounding exploration blocks, as well as allowing for the transportation of crude oil from other producing fields in the Llanos basin to local and international markets.
In 2009, the company focused its exploration and appraisal campaign on the Quifa and Rubiales blocks, drilling a total of 19 wells at those locations (5 exploratory and 14 appraisal wells). Of the 19 wells, 16 were successful and incorporated a total of 154.8 million bbl of combined proved plus probable (2P) gross reserves or 78.0 million bbl net reserves before royalties. The total net reserves after royalties reached 69.0 million bbl. At the Quifa block the discoveries were made on Prospects "D", "E", "H" and "I", as a result of 3 exploratory and 5 appraisals wells. At the Rubiales field the 8 successful appraisal wells extended the field to the west (Rub-147 on Prospect "D") and southwest (area of Rub-52). Only three dry-hole wells resulted from this exploration campaign: Quifa-15 and Rub-310 on Prospect "B" and Quifa-16 on Prospect "C."
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