Canadian Superior Highlights '09 Results
Canadian Superior Energy announced the release of its fourth quarter and year-end financial results for 2009.
Financial and Operating Highlights
- In September, 2009, the Company emerged from protection under the Companies' Creditors Arrangement Act (Canada) ("CCAA"). A new board of directors was appointed and the Company obtained a new $25 million line of credit which has since been increased to $40 million.
- In January 2010, the Company completed a private placement for gross proceeds of approximately $59.5 million and named James H.T. Riddell to the board of directors.
- Converted all the issued and outstanding Series A Preferred Shares for an equal number of Series B Preferred Shares and extended the redemption date from December 31, 2010 to December 31, 2011.
- In consideration of the current industry environment and market conditions, the Company announced in December 2009 that it relinquished its Mayflower and Marauder (Nova Scotia offshore exploration licenses 2406 and 2415). The Company did extend the Mariner Block (2409) until at least December 31, 2010.
- Effective January 1, 2010, the Company entered into a financial hedge whereby a Canadian chartered bank will cover 5500 GJ/day for a period January 1, 2010 to December 31, 2010 at $5.50 CAD/GJ against AECO monthly average index.
- Western Canada average daily production for the fourth quarter averaged 3,058 boe/d compared to 2,548 boe/d for the previous quarter. On a full year basis, average daily production was 3,020 boe/d in 2009 compared to 3,442 boe/d in 2008. The year-over-year decrease in volumes is primarily due to natural declines combined with minimal capital expenditures in 2009 imposed during the period the Company was under CCAA protection.
- The Company's proved plus probable reserves were 9,907 MBOE at December 31, 2009 compared to 10,585 MBOE for the previous year. The reduction was due to lack of reserve replacement related to the lower capital expenditures in 2009.
- Petroleum and natural gas sales decreased from $74.5 million in 2008 to $33.7 million in 2009. The decrease is mainly due to significant declines in commodity prices , natural declines in production volumes in 2009 compared to 2008 and the Company's inability to tie-in the successful wells from the 2008 drilling program due to limited capital available during CCAA.
- The Company was forced to postpone the 2009 drilling program until the Company exited from CCAA protection. The Company drilled 13 gross exploration wells (11.4 net) during November and December 2009 which satisfied the flow through commitment. The Company has approximately 800 boe/d awaiting tie-in.
- The increased loss in 2009 of $(53.3) million compared to the loss of $(23.8) million in 2008 is primarily due to decline in natural gas prices, $18.8 million in restructuring costs related to the receivership of the Trinidad Block 5 (c) asset and CCAA proceedings, and the write-down of the Canadian petroleum and natural gas properties of $57.5 million. The write down was primarily related primarily to pricing and slightly lower proved reserves in 2009 compared to 2008. In addition, approximately $40 million of unproved properties were added to the full cost pool, including $20 million related to East Coast Canada.
- The Company is planning the Zarat North appraisal well to be drilled in Tunisia. The rig selection process is well underway and the Company expects to have a contract in place soon. It is currently anticipated the well will be completed by year end.
- Geotechnical work continues on the 5c Block offshore Trinidad. The Company, together with its' partner and operator BG, are working to determine the optimal appraisal and commercialization strategy for the block. It is currently anticipated that an appraisal well will be drilled later this year or early next year. With the respect to the MG Block, the Company has met with Petrotrin and the Ministry of Energy and has formally requested that our obligations be transferred to a less environmentally sensitive and more prospective area. While we are hopeful that our request will be granted, it is possible that in order to relinquish the block we will be required to pay some portion of the performance security referenced in the MG Block Farm-in agreement.
- The Liberty LNG regassification project is on budget and moving forward with submission of a construction permit planned for July of this year. The Company continues to review joint venture opportunities related to this project.
- Canadian Superior has engaged Parkman Whaling, Alpha Petroleum Services and Ryder Scott for specific support services in Trinidad and Tunisia.
Business Overview and Future Strategy
With the Company exiting CCAA in September 2009, constituting a new board, negotiating a new banking arrangement and completing the Private Placement in January 2010, the Company is focused on the maximization of long-term sustainable value to the shareholders by:
- Hiring a Chief Executive Officer with the skills and strategic vision to extract value from the Company's assets while pursuing new areas of growth.
- Increasing the value of the Company's interests in Trinidad and Tobago, including a realistic and timely development plan for Block 5(c) with the Company's partner BG;.
- Appraisal, development and production of crude oil and natural gas from the 7th of November Block. Further, refining the various exploration prospects identified on the Block and seeking additional exploration and exploitation opportunities elsewhere in Tunisia and Libya.
- Developing the Western Canada asset base to increase average daily production along with replacement of producing reserves on an economic and cost effective basis by exploitation, full-cycle exploration and strategic acquisition. The Company is currently evaluating its entire acreage position in anticipation of an aggressive, multi-year drilling program commencing in the third quarter of 2010. Capital expenditures planned for the balance of 2010 will be approximately $25 million with near-term focus on the Drumheller and Kaybob core areas.
- Evaluating synergistic growth opportunities in North America focusing on both conventional and unconventional oil projects.
- Re-imaging the Company and continuing to build an ethical and transparent business culture.
Speaking today, Marvin M. Chronister, Canadian Superior's Chairman of the Board, said, "While the Company has been through a very difficult period during 2009, we believe it has emerged and continues to evolve as a much stronger company than it has ever been. We are aggressively pursuing our growth strategy and development of our assets. Therefore, we believe the best is still to come for our shareholders."
- Canadian Superior Energy Notes Operational Updates (Jun 03)
- Canadian Superior Energy Posts 1Q10 Results (May 13)
- Canadian Superior Energy Waves Goodbye to COO (May 05)