SOURCE: Coastal Energy Company

Coastal Energy Company

August 15, 2011 16:44 ET

Coastal Energy Announces Second Quarter 2011 Financial Results

HOUSTON, TX--(Marketwire - Aug 15, 2011) - Coastal Energy Company (the "Company" or "Coastal Energy") (TSX: CEN) (AIM: CEO), an independent exploration and production company with assets in Thailand, announces the financial results for the three and six months ended June 30, 2011. The functional and reporting currency of the Company is the United States dollar.

Second Quarter 2011 Highlights

  • Total Company production declined slightly in Q2 to 9,494 boe/d from 9,814 boe/d in the same period last year. The Company's offshore production from its two producing fields in the Gulf of Thailand averaged 7,203 bbl/d in the second quarter, down 9% from the same period last year. The decline in offshore production is mainly attributable to downtime for workovers during the quarter, as well as pressure declines in the Songkhla A-09 and A-11 wells due to lack of aquifer support. The Company plans to drill injection wells to restore production from these wells later in 2011. Onshore production averaged 2,291 boe/d, up from 1,900 boe/d last year driven by increased Thai gas demand.

  • The Company completed the first phase of exploration drilling at Bua Ban North A & B and announced major discoveries in the Miocene trend at both fields. The Company drilled three successful wells at Bua Ban North A and seven successful wells at Bua Ban North B. A MOPU has been set on location at Bua Ban North B and production testing is underway.

  • Subsequent to the end of the quarter, the Company announced the initial production testing results at Bua Ban North B. Production is currently 7,100 bbl/d out of four of the seven wells. The Company is currently completing and tying in the remaining wells.

  • Early in the third quarter, the Company also announced successful exploration results at Songkhla H. The discovery well flow tested 1,000 bbl/d of oil without an electric submersible pump. An appraisal well was drilled to determine the size of the discovery. The Company has begun planning a full scale field development and is beginning the process of applying for development approval.

  • The Company announced that it is moving the drilling rig back to the Bua Ban North field to perform further appraisal and development drilling in the third quarter.

  • The Company received approval to list its shares on the main board of the Toronto Stock Exchange. Its Common Shares began trading on the TSX on July 5, 2011 under the ticker symbol "CEN."

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

"I'm pleased to report that Coastal's success continued in the second quarter of 2011. Eleven of the twelve exploration wells drilled to date have been successful in discovering commercial quantities of oil. As we have begun tying in production from these discoveries, we have seen material increases in production which will result in increased cash flow in the coming quarters.

"In addition to the exploration success, Coastal has enjoyed further financial success in 2011. We have delivered EBITDAX that is 25% greater than in the first six months of 2010. We expect to post significant production and EBITDAX increases in the coming quarters driven by our recent discoveries.

"We plan to continue building on this success in the coming quarters as we bring more production online and further appraise these Miocene discoveries. The success of the Miocene is encouraging and opens up several new prospect areas for Coastal's drilling program in the second half of 2011."

The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three and six months ended June 30, 2011 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 USD thousands, except share and per share amounts.

Three months ended Six months ended
June 30, June 30,
2011 2010 2011 2010
Revenues and Other Income
Oil sales, net of royalties 59,610 39,010 126,321 84,870
Other income (2,027 ) 33 (23,111 ) 181
57,583 39,043 103,210 85,051
Expenses
Production 17,124 8,211 39,342 19,206
Depreciation and depletion 11,698 3,684 24,984 9,657
General and administrative 6,457 4,095 11,720 7,892
Exploration 931 91 6,484 9,358
Debt financing fees 31 119 265 243
Finance 1,201 749 2,363 1,481
37,442 16,949 85,158 47,837
Net income before income taxes, share of net income from Apico LLC and non-controlling interest 20,141 22,094 18,052 37,214
Share of net income from Apico LLC 4,272 3,156 7,528 6,140
Net income before income taxes and
non-controlling interest
24,413 25,250 25,580 43,354
Income taxes
Current - (946 ) - 18
Deferred 12,005 13,615 15,188 19,192
12,005 12,669 15,188 19,210
Net income and comprehensive income 12,408 12,581 10,392 24,144
Net income attributable to non-controlling interest (592 ) (55 ) (938 ) (50 )
Net income and comprehensive income attributable to the shareholders of Coastal Energy Company 11,816
12,526
9,454
24,094
Net income per share:
Basic 0.11 0.11 0.08 0.22
Diluted 0.10 0.11 0.08 0.21
June 30, December 31, January 1,
As at 2011 2010 2010
$ $ $
Assets
Current Assets
Cash 2,186 3,884 21,229
Restricted cash 20,872 16,369 3,829
Accounts receivable 12,092 10,299 6,111
Derivative asset 179 135 66
Inventory 17,095 12,783 5,310
Prepaids and other current assets 126 606 526
Total current assets 52,550 44,076 37,071
Non-Current Assets
Exploration and evaluation assets 75,233 31,068 44,907
Property, plant and equipment 234,677 246,248 189,534
Investment in and advances to Apico LLC 54,067 47,261 55,225
Deposits and other assets 292 289 300
Total non-current assets 364,269 324,866 289,966
Total Assets 416,819 368,942 327,037
Liabilities
Current Liabilities
Accounts payable and accrued liabilities 49,771 53,550 31,363
Deferred income - - 23,060
Current portion of long-term debt 28,668 36,262 10,266
Amounts due to shareholder - - 5,164
Obligations under finance leases 838 885 35
Current portion of derivative liabilities 21,892 10,141 -
Total current liabilities 101,169 100,838 69,888
Non-Current Liabilities
Long-term debt 48,874 35,081 24,284
Obligations under finance leases 394 579 1,439
Non-current portion of derivative liabilities 5,415 6,609 -
Deferred tax liabilities 27,073 11,885 23,653
Decommissioning liabilities 20,558 17,655 4,071
Total Non-Current Liabilities 102,314 71,809 53,447
Shareholders' Equity
Common shares 208,389 201,303 198,121
Contributed surplus 15,661 15,892 13,779
Warrants 29 79 153
Accumulated deficit (18,084 ) (27,538 ) (13,968 )
Total Coastal Energy Company Shareholders' Equity 205,995 189,736 198,085
Non-Controlling Interest 7,341 6,559 5,617
Total equity 213,336 196,295 203,702
Total liabilities and equity 416,819 368,942 327,037
Three months ended Six months ended
June 30, June 30,
2011 2010 2011 2010
Operating activities
Net income attributable to the shareholders of Coastal Energy Company 11,816 12,526 9,454 24,094
Adjustments:
Share of net income from Apico LLC (4,272 ) (3,156 ) (7,528 ) (6,140 )
Non controlling interest 592 55 938 50
Unrealized loss (gain) on derivative instruments (7,674 ) 1 10,513 66
Depletion and depreciation 11,698 3,684 24,984 9,657
Finance expense 1,417 1,097 2,363 1,481
Amortisation of debt financing fees 31 - 265 -
Stock-based compensation 3,624 1,892 5,746 3,151
Deferred income taxes 12,005 13,615 15,188 19,192
Unrealized foreign exchange loss 308 144 457 144
Exploration expense 931 91 6,484 9,358
Income taxes paid - - - (6 )
Interest income 1 1 2 3
Interest paid (1,982 ) (533 ) (2,294 ) (1,043 )
Earnings Distributions from Apico LLC 1,265 3,613 2,168 4,154
Change in non-cash working capital 2,808 19,328 (4,735 ) 13,662
32,568 52,358 64,005 77,823
Financing Activities
Issuance of common shares, net of issuance costs 749 46 5,442 1,886
Borrowings under long-term debt - - 6,275 -
Repayment of long-term debt - (1,000 ) - (5,979 )
Loan arrangement fees (348 ) - (348 ) -
Repayment of amounts due to shareholder - (253 ) - (2,003 )
Other (375 ) - (375 ) -
26 (1,207 ) 10,994 (6,096 )
Investing Activities
(Increase) decrease in restricted cash (11,036 ) 415 (4,503 ) 792
Purchase of property, plant and equipment (33,422 ) (53,532 ) (69,892 ) (89,864 )
Advances to Apico LLC (1,446 ) - (1,446 ) -
Deposits and other assets 40 - (3 ) (6 )
(Payments to) contributions from non-controlling interest - - (156 ) 750
(45,864 ) (53,117 ) (76,000 ) (88,328 )
Effect of exchange rate changes on cash (456 ) (116 ) (697 ) 19
Decrease in cash (13,726 ) (2,082 ) (1,698 ) (16,582 )
Cash - Beginning of period 15,912 6,729 3,884 21,229
Cash - End of period 2,186 4,647 2,186 4,647

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.com or 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.

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)
    +44 (0) 20 7409 3494
    Rory Murphy
    Paul Cocker

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

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

    Buchanan Communications
    +44 (0) 20 7466 5000
    Tim Thompson
    Ben Romney
    Helen Chan