SOURCE: Coastal Energy Company

Coastal Energy Company

April 18, 2011 18:13 ET

Coastal Energy Announces 2010 Year End Financial Results

HOUSTON, TX--(Marketwire - Apr 18, 2011) - Coastal Energy Company (the "Company" or "Coastal Energy") (TSX-V: CEN) (AIM: CEO), an independent exploration and production company with assets in Thailand, announces the financial results for the year ended December 31, 2010. The functional and reporting currency of the Company is the United States dollar.

Fourth Quarter 2010 Highlights

  • Total Company production averaged 7,578 boepd in the fourth quarter; offshore production was impacted by 23 days of downtime (15 related to weather and 8 for processing facilities upgrades).

  • The Company drilled three exploration wells at Songkhla A and each well discovered new reservoirs in the Lower Oligocene and Eocene intervals. These three new fault blocks are estimated by the Company to collectively contain approximately 80 million barrels of oil in place. The wells have since been tied into production facilities. Further appraisal and development work around these three discoveries is planned for 2011.

  • The Company reported EBITDAX of $2.6 million ($0.02 per basic share) for Q410. The decline from Q310 is attributable to lower production and lifting volumes due to downtime on the Company's offshore operations.

Full Year 2010 Highlights

  • Total Company production averaged 9,670 boepd for the full year of 2010, 31% above 2009 levels.

  • A total of 2.8 million barrels of oil and 4.3 bcf of gas net to the Company were produced during the year. The average prices realized were $70.47 / barrel for oil and $7.07 / mcf for gas

  • The Company brought its Bua Ban field onstream in July.

  • The Company's full year 2010 EBITDAX was $112.7 million, 197% above 2009 EBITDAX of $37.9 million.

  • The Company released the results of its third-party reserve evaluation report prepared by Huddleston & Co. dated March 28, 2011 (effective date December 31, 2010)

  • As of the date of this release, the Company has cash and cash equivalents of approximately $35MM.

As of December 31, 2010 (mmboe)As of December 31, 2009 (mmboe)After-Tax
NPV 2010
(US$MM)
After-Tax
NPV 2009
(US$MM)
% ChangeAfter-Tax NPV 2010 using March 31, 2011 Pricing
(US$MM)
% Change
Proven
Offshore14.515.2$413.5$345.219.8 %$498.244.3%
Onshore8.08.0114.0107.46.1 %114.06.1%
Total 1P22.523.2527.5452.616.5 %612.235.3%
Proven + Probable
Offshore27.132.9$583.6$577.11.1 %$716.224.1%
Onshore23.922.1207.0203.51.7 %207.01.7%
Total 2P51.055.0790.6780.61.3 %923.218.3%

Note: Reserve figures are shown as net working interest before royalties (Thailand royalty regime is discussed in the MD&A of the Company's Annual Report dated December 31, 2010). After-tax NPV figures are defined as future net revenues discounted at 10%. Reserve numbers taken from the Company's competent person's report prepared by Huddleston & Co. dated as of December 31, 2010 (prepared in accordance with NI 51-101 and the COGE Handbook) which may be found on the Company's website at www.coastalenergy.com.

Randy Bartley, President and CEO of Coastal Energy, commented:

"2010 was a record year for Coastal Energy. We had record production volumes and cash flow. The Company successfully completed the first phase of development at the Bua Ban field and drilled three successful exploration wells at Songkhla. We are pleased with the results and expect to build on this foundation with further success in 2011.

"The slight reduction in offshore reserves is attributable to a write down at the Bua Ban field following development drilling in Q310. Several of the wells encountered thinner pay zones than were used previously in calculating the reserve estimates. However, we are pleased that the exploration drilling at Songkhla in Q410 added enough reserves to almost fully offset the decline in Bua Ban reserves. We plan further appraisal drilling at Songkhla later in 2011 to further refine our oil in place estimates and recovery factors for these reservoirs, which could serve to increase reserve estimates.

"2011 is off to a terrific start. We have drilled successful exploration wells at Bua Ban North A and have already discovered over 50 million barrels of oil in place (per Company estimates) in the first three and a half months of the year. Coastal has also successfully fractured two wells at Bua Ban, which we continue to evaluate. We are evaluating a development plan for horizontal wells and multi-stage fracs in both the Eocene and Lower Oligocene reservoirs at Bua Ban to increase production rates and ultimate recoveries.

"We have a busy year ahead of us with the remainder of Bua Ban North exploration drilling, development work on the recent discovery at Bua Ban North, Southern Bua Ban appraisal and exploration and further appraisal and development drilling at Songkhla."

The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three and twelve months ended December 31, 2010 with the notes thereto and the related Management Discussion and Analysis can be found either on Coastal's website at www.CoastalEnergy.com or on SEDAR at www.sedar.com. All amounts are in US$ thousands, except share and per share amounts.

20102009
$$
Revenues
Oil and natural gas193,60886,348
Royalties(16,401)(5,878)
Loss on derivative risk management contracts (Note 13)(18,247)(2,077)
Interest income527
Other income99110
159,06478,530
Expenses and other
Production53,36833,477
General and administrative20,25319,576
Foreign exchange loss4,6001,941
Interest2,0073,839
Debt financing fees (Note 13)5221,454
Depletion, depreciation and accretion56,59923,695
Impairment (Note 9)10,7062,366
Loss on sale of assets-148
148,05586,496
Net income (loss) before taxes, earnings from significantly influenced investee and non-controlling interest11,009(7,966)
Income taxes (Note 18)15,947738
Net loss before earnings from significantly influenced investee and non-controlling interests(4,938)(8,704)
Earnings from significantly influenced investee (Note 8)10,9598,462
Net income (loss) before non-controlling interests6,021(242)
Non-controlling interest (Note 4)(1,167)127
Net income (loss) and comprehensive income (loss)4,854(115)
Deficit, beginning of year(16,702)(16,587)
Deficit, end of year(11,848)(16,702)
Basic and diluted earnings per share (Note 15)0.040.00

As at December 31,
20102009
$$
Assets
Current assets
Cash3,88421,229
Restricted cash (Note 5)16,3693,829
Accounts receivable (Note 6)10,2996,111
Derivative asset (Note 13)13566
Inventory (Note 7)12,8465,310
Prepaids and other current assets606526
44,13937,071
Investment in and advances to Apico LLC (Note 8)50,28855,225
Property, plant and equipment (Note 9)318,374233,014
Deposits and other assets289299
Total Assets413,090325,609
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 10)53,51931,325
Current portion of derivative liabilities (Note 13)10,141-
Deferred income (Note 11)-23,060
Income taxes payable (Note 18)3138
Amounts due to shareholder (Note 12)-5,164
Current portion of long-term debt (Note 13)36,26210,266
99,95369,853
Long-term debt (Note 13)35,08124,284
Non-current portion of derivative liabilities (Note 13)6,609-
Asset retirement obligations (Note 14)12,2772,809
Future income tax liability (Note 18)47,18527,695
Total Liabilities201,105124,641
Commitments and contingencies (Note 19)
Non-controlling interest (Note 4)6,5595,617
Shareholders' equity
Share capital (Note 15)201,303198,121
Contributed surplus (Note 15)15,89213,779
Warrants (Note 15)79153
Retained deficit(11,848)(16,702)
205,426195,351
413,090325,609
20102009
$$
Operating activities
Net income (loss) for the year4,854(115)
Distributions from significantly influenced investee (note 8)15,8968,129
Items not involving cash:
Depletion, depreciation and accretion56,59923,695
Impairment10,7061,765
Future income taxes (note 19)15,954700
Unrealized foreign exchange loss2,890909
Income (loss) applicable to non-controlling interest1,167(127)
Stock based compensation7,8278,021
Amortisation of debt financing fees132-
Issuance of warrants with notes payable-294
Share of earnings of significantly influenced investee, net of taxes(10,959)(8,462)
Unrealized loss on derivative instrument16,6811,950
Loss on sale of assets-148
Change in non-cash working capital (Note 20)(26,771)17,095
Cash provided by operating activities of continuing operations94,97654,002
Investing activities
Investment in and advances to Apico LLC-(4,516)
Increase in restricted cash(12,540)317
Purchase of property, plant and equipment(133,375)(77,671)
(Payments to) contributions from non-controlling interest partner(225)5,744
Other(2)
Cash used in investing activities(146,140)(76,128)
Financing activities
Issuance of shares for cash2,40952,306
Transaction costs associated with issuance of shares-(2,984)
Borrowings under long-term debt73,7251,620
Credit facility transaction costs(2,514)-
Repayments under long-term debt(34,550)(11,070)
Borrowings under notes payable-15,000
Repayments under notes payable-(15,000)
Borrowings under amounts due to shareholder-1,000
Repayments under amounts due to shareholder(5,164)(3,000)
Cash provided by financing activities33,90637,872
Net effect of foreign exchange on cash held in foreign currencies(87)(951)
Change in cash(17,345)14,795
Cash, beginning of year21,2296,434
Cash, end of year3,88421,229
Supplemental cash flow information (Note 20)

Randy Bartley, President and Chief Executive Officer of the Company and a member of the Society of Petroleum Engineering and Jerry Moon, Vice President, Technical & Business Development, a member of the American Association of Petroleum Geologists, a Licensed Professional Geoscientist and a Certified Petroleum Geologist in the state of Texas, have reviewed the contents of this announcement.

Additional information, including the Company's complete competent person's report may be found on the Company's website at www.CoastalEnergy.comor may be found in documents filed on SEDAR at www.sedar.com.

This statement contains 'forward-looking statements' as defined by the applicable securities legislation. Statements relating to current and future drilling results, existence and recoverability of potential hydrocarbon reserves, production amounts or revenues, forward capital expenditures, operation costs, oil and gas price forecasts and similar matters are based on current data and information and should be viewed as forward-looking statements. Such statements are not guarantees of future results and are subject to risks and uncertainties beyond Coastal Energy's control. Actual results may differ substantially from the forward-looking statements.

These securities have not been registered under United States Securities Act of 1933 (the "US Securities Act") or the securities laws of any state and may not be offered or sold in the United States or to US persons (as defined in Regulation S under the US Securities Act) unless an exemption from registration is available.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

This news release is not for dissemination in the United States or through United States newswire services

Contact Information

  • Enquiries:

    Coastal Energy Company
    Email: Email Contact
    +1 (713) 877-6793

    Strand Hanson Limited (Nominated Adviser)
    Rory Murphy
    Paul Cocker
    +44 (0) 20 7409 3494

    Macquarie Capital (Europe) Limited (Broker) +
    Ben Colegrave
    Paul Connolly
    44 (0) 20 3037 2000

    FirstEnergy Capital LLP (Broker)
    Hugh Sanderson
    Travis Inlow
    +44 (0) 20 7448 0200

    Buchanan Communications
    Tim Thompson
    Chris McMahon
    Ben Romney
    +44 (0) 20 7466 5000