Antrim Completes 2008 with Healthy Cash Position, Additional Reserves
Antrim has released its 2008 year-end financial and operating results. The results include a summary and evaluation of reserves that have been independently assessed by McDaniel & Associates Consultants Ltd. in accordance with the standards specified by National Instrument 51-101.
All financial figures are audited and in US dollars except for quarterly figures which are unaudited.
- Financial flexibility with strong cash position of $35 million and no debt
- Replaced 2008 production with proved reserves
- United Kingdom proved plus probable oil reserves decreased 10.6% to 26.2 million boe
- United Kingdom proved plus probable oil reserve evaluation (NPV10) increased 38% to $356 million
- Argentina proved plus probable oil and gas reserves increased 11.2% to 9.9 million boe
- Argentina proved plus probable oil and gas reserve evaluation (NPV10) increased 27% to $67 million
Antrim completed 2008 with a healthy cash position of $35 million, no debt and replacing 2008 oil and gas production with additions to the proved reserves. In Argentina, a successful drilling program helped to increase proved plus probable reserves 10.6% to 9.9 million boe. In addition to the increase in reserves, improved gas contract pricing increased the proved plus probable reserve value in Argentina 27% to $67 million.
In the United Kingdom, total proved plus probable reserves decreased 10.6% from 29.3 million boe in 2007 to 26.2 million boe (net to Antrim). Fyne and Dandy total proved plus probable reserves increased marginally to 16.0 million boe as at December 31, 2008 compared to 15.9 million boe in 2007. The Fyne and Dandy fields now represent 44% of the Company's total proved plus probable reserves. A revision in the geophysical interpretation of the Causeway structure based on a reprocessing and reinterpretation of seismic data resulted in total proved plus probable reserves decreasing 23.9% from 13.4 million boe in 2007 to 10.2 million boe (net to Antrim). The decline in UK reserves was offset by reduced development costs and higher forecasted oil prices resulting in a 38% increase in reserve value to $356 million.
Oil and gas revenue decreased to $12.0 million in 2008 from $14.0 million in 2007. For the three months ended December 31, 2008 oil and gas revenue was $2.7 million compared to $3.3 million in 2007. Revenues decreased as a result of lower oil, natural gas and NGL production and lower gas prices received. The decrease in oil production was due to a natural reservoir decline. Gas production declined and prices were depressed for much of the year due to construction and commissioning of a pipeline and associated facilities linking Antrim's gas production with the San Martin gas sales line and mainland industrial markets. The lack of access to higher priced markets until mid September 2008, resulted in gas production being sold to Tierra del Fuego consumers at an average price of $1.10 per thousand cubic feet (mcf) for 2008. NGL production declined in the fourth quarter 2009 due to an unscheduled two month shut down of a refrigeration unit at the San Luis gas plant in Tierra del Fuego.
Net production to Antrim in 2008 was 1,411 boepd compared to 1,553 boepd for 2007. For the three month periods ended December 31, 2008 and 2007, net production was 1,391 and 1,588 boepd respectively. Subsequent to the end of the year, production rates have risen to approximately 1,800 boepd.
Antrim generated cash flow from operations of $0.3 million for the year ended December 31, 2008 compared to $4.5 million in 2007. For the three month period ended December 31, 2008 the Company incurred a cash flow from operations deficiency of $1.0 million while in the same period of 2007 cash flow from operations was $1.1 million. Cash flow decreased from 2007 to 2008 due to lower production, lower gas prices received, higher operating costs and higher G&A expenses.
Expenditures on petroleum and natural gas properties in 2008 were $91.2 million compared to $97.4 million in 2007. Antrim completed its 2008 drilling program in the UK North Sea successfully drilling the final well before first production on the Causeway property, and drilling two future production wells on the Fyne property. In Argentina, Antrim drilled 17 wells in 2008, resulting in five (1.29 net) oil wells, five (1.29 net) gas wells, five (2.0 net) wells waiting on completion and two (0.52 net) wells were plugged and abandoned.
Antrim is in a strong financial position with unrestricted cash available of $35.3 million and no debt as at December 31, 2008, providing Antrim with financial and operational flexibility during a period of uncertain economic conditions. The Company plans to minimize its cash utilization on its existing properties in 2009 by reducing capital expenditures, operating expenses and general and administrative costs. Antrim plans to use its financial strength and operating experience to make additional strategic acquisitions in its areas of operation.
Antrim maintains a high working interest and operational control of its two major UK properties. Antrim plans continued development of its Causeway and Fyne fields and will minimize further significant capital expenditures or financial commitments pending stabilization of commodity prices and the recovery of the capital markets. In the interim, the Company is reviewing the subsea tie-in plans for Causeway with the objective of reducing development costs. As a result, our target of obtaining first production from Causeway will be extended to 2011, subject to favourable commodity and financial market conditions.
Antrim will continue to work towards preparing an FDP for the Fyne field in 2009. The Company plans to phase-in these two UK developments. This approach will minimize the initial capital commitment required by Antrim and will provide funding for subsequent production phases from cash flow generated by previous phases. The Company will continue to assess market conditions to ensure that we execute our strategy in a fiscally prudent manner.
The Argentina drilling program in Tierra del Fuego was successful in adding reserves, future production potential and significant value; however, current economic conditions dictate a shift in strategy away from drilling and towards lower cost production increases. In December 2008, Antrim discontinued the drilling program and will focus in 2009 on increasing production through existing well tie-ins. In late 2008 and early 2009, Antrim negotiated contracts to sell increased volumes of Tierra del Fuego gas into the mainland industrial market. These contracts provide for increasing volumes and pricing over the next two to three years.
Total capital expenditures for 2009, before capitalized G&A, are planned to be $6 million, which will be funded out of existing working capital and cash flow from operations. As gas delivery rates increase in Tierra del Fuego, Antrim anticipates production in 2009 to average approximately 2,300 boepd.
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