Maurel & Prom: H108: Sustained Activity & Promising Outlooks
PARIS, August 29 /PRNewswire-FirstCall/ — A sustained activity
– 29% increase in entitled production up to 15 098 b/j (including Venezuela) – 29% increase in revenues up to EUR176.5 million – 300% increase in operating income up to EUR86.4million – 52% increase in net income up to EUR21.1million, after taking account of a negative financial result amounting EUR48,7 million – EUR243 million invested – Exploration expenses of EUR79 million; – Development capex of EUR145 million; – Oil services investments of EUR18 million. – Shareholder payback: – Dividende payment for EUR137 million; – Share buy back for EUR32 million – Lagopetrol consolidation under the equity method – New exploration successes : – In Colombia on the Ocelote field – In Gabon on the Omoueyi field Promising outlooks – 30,000 b/j produced as soon as the end of 2008, one year in advance on the initial plan (Onal first oil in Gabon and Ocelote field appraisal in Colombia) – Pursuance of the exploration program : – Exploration success : OMKO in Gabon and Ocelote in Colombia – 9 drillings to come in second half 2008
Preliminary note: financial information and consolidated statements have been validated by the Board of Directors on 28 August 2008. Audit works preliminary to the Statutory Auditors’ validation are in process.
Key period indicators In EURM H1 2008 H1 2007 Var. Revenues 176.5 137.1 +29% Operating income 86.4 21.6 +300% Financial result (48.7) (6.5) -649% Integrated companies result before taxes 37.8 15.1 +150% Taxes (21.5) (0.9) +7 067% Integrated companies net result 16.3 14.2 +15% Companies consolidated under equity method result 4.7 (0.3) nc Net result of kept activities 21.1 13.9 +52% Net result of kept activities/share (EUR) base 0.18 0.12 +50% share diluted share 0.16 0.10 +60% Net cashflow from operating activities 81.1 15.4 +427% Entitled production* (b/j) 15 098 11 665 +29% Average sale price ($/b) 82.95 56.76 +46% * Net production after oil taxes in kind Environment data are as follow : Environmental data H1 2008 H1 2007 Change Average exchange rate (US$/EUR) 0.65 0.75 -13% Average exchange rate (EUR/US$) 1.53 1.33 Closing exchange rate (US$/EUR) 0.63 0.74 -15% Closing exchange rate (EUR/US$) 1.58 1.35 Brent (US$/bbl) 109.3 63.2 +73% WTI (US$/bbl) 111.0 61.3 +81% At 31 December 2007, the closing exchange rate was 0.68EUR for 1US$.
The Group’s oil and gas activities are largely focused on exploration and developing the Group’s mining portfolio. Maurel & Prom also rapidly brings its discoveries to production by launching ambitious development campaigns backed by Caroil, its drilling subsidiary.
Financial summary for the period Lagopetrol (Venezuela)
After long negotiations with the Venezuelan State, Maurel & Prom group obtained 26.35% of the equity and 2 Board members (out of 5) in Lagopetrol in exchange for the Group’s previous Venezuela-based oil assets, in particular oil reserves.
An agreement on the transfer of those assets to Lagopetrol was signed with PdVSA on 12 December 2007, which was made official through the publication of a transfer decree in the Venezuelan Official Journal on 11 January 2008. As a result, Maurel & Prom has been consolidating Lagopetrol under the equity method since January 2008 (Notes 4, 7 and 9).
Production
The Group’s entitled production for the half-year of 15,098 barrels per day comes mainly (13,204 b/d) from Colombia. The average sale price was $82.95/bbl taking account of the hedge on a portion of Colombian production.
The rest of the production comes from Venezuela (1,678 b/d), from Gabon via the Banio well currently undergoing long term testing and from Congo via the Tilapia field.
Revenues
Revenues increased 29% to EUR176.5 million over first half 2007, largely comprising sales of oil in Colombia (78%) and drilling activities of the wholly-owned subsidiary, Caroil (22%).
In US dollars, total Group first half 2008 revenues came in at $270.1 million, up 48% from $182.1 million in first half 2007.
According to the accounting policy (Lagopetrol being consolidated under the equity method), Venezuela’s production was not included in Group revenues.
Operating income
The Group’s operating income for first half 2008 was EUR86.4 million, up 301% over first half 2007. The operating margin therefore went up from 16% to 49%.
The increase in operating income can be mainly explained by the increase in revenues and the positive impact of the consolidation of Lagopetrol in Venezuela under the equity method for +EUR16.2 million.
Exploration expenses of EUR10.3 million correspond to the plugged and abandoned exploration wells (Cumbia, Brassia, Cocli NE, and Cocli SO) as well as to the relinquishment of the Achira permit.
The contribution of the drilling subsidiary Caroil to operating income was EUR7.4 million.
Financial result The financial result was a loss of EUR48.7 million broken down as follows: – Interest expenses on OCEANE bonds of EUR12,187K for first half 2008 up from EUR11,832K for first half 2007; – A latent loss of EUR33.1 million including: – EUR10.4 million for swaps on crude corresponding to a hedge on 2,250b/d. Starting on April 1st, this hedge is allocated to the Colombian production; – EUR21.1 million on foreign exchange options broken down in EUR6.3 million on common cash management, and EUR14.8 million coming from a series of complex and structured operations initiated by a single individual and performed out of the Group’s standards and procedures. It has been identified by the management and is under studying for any possibility of recourse. It could lead to a potential additional loss of EUR21 million to be added to the EUR14.8 million one accounted in first half 2008. – Foreign exchange losses incurred at the beginning of 2008 on foreign currency cash because of an unfavourable movement in the EUR/USD exchange rate and an accomodation of suppliers with this new Environment (some of them stopping the invoicing in USD), which totalled EUR17.2 million; – Cash investment income of EUR1.3 million and other income of EUR14.3 million which include: – interest income on term deposits of EUR8.7 million; – EUR3.2 million in gains related to oil trades. Consolidated income
Consolidated net income from continuing activities amounted to EUR21.1 million, up 52% over first half 2007.
This increase can be explained by: – A rise in operating income; – A deteriorated financial result; – The first time consolidation under the equity method of Lagopetrol in Venezuela; – Change in the income tax charge. Caroil posted first half 2008 consolidated net income of EUR6.6 million. Balance sheet
The balance sheet total was EUR1,665.3 million down from EUR1,844.0 million as at 31 December 2007.
Group shareholders’ equity totalled EUR643.6 million down from EUR1,057.8 million as at 31 December 2007 due to a EUR(222.5) million adjustment on derivative instruments as at 30 June 2008, a dividend amounting to EUR(137.1) million, exchange losses of EUR(59.8) million and EUR(31.6) million of treasury shares bought back.
Investments
First half 2008 actual capital expenditure came to EUR243 million broken down as follows:
EURM Colombia Gabon Tanzania Other TOTAL Exploration 45 18 14 3 79 Development 33 111 1 145 Oil services 3 15 18 TOTAL 80 129 14 19 243 Cash flows First half 2008 Group cash flow before tax in was EUR107.6 million. Net cash flow from operating activities was EUR81.1 million.
At 30 June 2008, Maurel & Prom’s net cash amounted to EUR273.2 million, excluding EUR72 million accounted in non-current assets, down EUR421.1 million compared to 31 December 2007. This change can be explained by:
The activity of the period: increase in cash flow from operations for EUR81 million;
– A strong investment effort: – Exploration expenses of EUR79 million; – Development capex of EUR145 million; – Oil services investments of EUR18 million. – The shareholder payback: – Dividend payment for EUR137 million; – Share buy back for EUR32 million – EUR(72) million in outflows for margin calls on financial instruments paid temporarily to banks under the crude hedging transactions (based on the market value of those instruments as at 30 June 2008). Exploration and appraisal
In addition to the preliminary study phases, exploration can be divided into two parts: seismic campaigns and drilling.
Seismic campaigns
The various seismic campaigns acquired a total of 2,437 km of 2D lines and 270 km squared of 3D lines.
In addition, aeromagnetic acquisition campaigns related to the Etekamba permit in Gabon and the Bigwa – Rufiji – Mafia permit in Tanzania, were undertaken during first half 2008.
Exploration drillings
During first half 2008, 12 exploration drilling projects were undertaken as follows:
– Seven exploration wells were completed at 30 June 2008. Four were abandoned and two yielded positive results. The results obtained during the drilling of the Lince-1 well are under review. – Five exploration wells were undergoing drilling at 30 June 2008, including OMKO-1 and Ortega Sur which yielded positive results in July 2008. The Guanabana and Huron wells in Colombia and M’Bezi well in Tanzania are still undergoing drilling at 31 July 2008. Appraisal drillings
The Ocelote field on the Guarrojo permit in Colombia is in the appraisal phase with three wells already drilled as at 30 June 2008. An appraisal well has already been drilled on the Pacande field located on the Ortega Incremental Production Contract. The two appraisal wells drilled on the San Jacinto & Rio Paez (La Canada Norte field) permit confirmed the findings from early 2007.
Development and production Colombia
The development drilling campaign was primarily focused on the Palermo permit (Maurel & Prom operator, 50%) with three drilled wells, and in the Eastern Llanos region where Perenco is the operator, with eight new wells drilled and five workovers performed. The effect of this campaign has been to limit the natural decline of these mature fields.
Gabon
The development activities in Gabon were focused mainly on the Omoueyi permit with the Onal field (Maurel & Prom operator, 85%).
In first half 2008, 6 development wells (including 2 water injection wells) and 2 water producing wells were drilled on the Onal field for a total at 30 June 2008 of 18 development wells (including 6 water injection wells) and 3 water producing wells.
At the end of June 2008, the earthwork and foundations of the production center and the storage tanks were completed and the facilities are being installed on the site.
Oil services: Caroil In first half 2008 Caroil continued development work as follows: – The Caroil 11 and Caroil 15 rigs started working; – “Non-Group” customers were acquired; – Order and building of a new drilling rig (Caroil 16).
At 30 June 2008, 13 drilling rigs were operational, one was in the process of being delivered and another one was in maintenance.
Out of the 13 drilling rigs in service, 8 were operating for non-Group customers including 5 in Congo and 3 in Colombia.
Post- balance sheet events Colombia
The Ortega Sur well (Ortega incremental production contract) came across three gas-impregnated intervals in the Caballos and Tetuan formations. The total estimated production of the well is 7.5 million cubic feet per day, that is, 1,350 b/day.
The Guanabana-1 well was suspended due to technical problems and will be resumed later.
Gabon
The OMKO-1 well found two oil-impregnated sandstone intervals in the following geological formations:
– Kissenda on 56 m, a new oil play in the Gabon region, which produced flows of 3,050 b/day on a 40/64” choke with a head pressure of 595 psi; – Gres de Base on 43.5 m, an oil play that Maurel & Prom has already demonstrated in Congo with the M’Boundi and Kouakouala field and in Gabon with the Onal field. This produced flows of 2,460 b/day on a 32/64” choke with a head pressure of 660 psi. The oil produced is between 35.7degrees and 36.7degrees API. Risks and uncertainties
The Group’s results are sensitive to various market risks, of which the most significant are oil and natural gas prices and the EUR/USD exchange rate.
The Group has put into shape a hedge policy to prevent hydrocarbons prices volatility. In terms of exchange rates, the Group has a foreseeing management of currencies accounts.
However, it is to be noticed that a series of complex and structured operations, due to a single individual and performed out of the Group standards and procedures, has been identified by the management and is under studying for any possibility of recourse. It could lead to a potential additional loss of EUR21 million to be added to the EUR14.8 million one accounted in first half 2008.
Maurel & Prom operational risks are described in Chapter 7 of the Group’s 2007 annual report.
Second half outlooks
The Group is currently on track to meet its two strategic objectives, namely to meet production levels of 30,000 b/day and reserves of 250 to 300 Mboe by the end of 2009.
Given the additional productions through Lagopetrol (Venezuela, 1,700 b/d), Ocelote (Colombia) and Onl field first oil, the Group’s entitled production should raise up to 30,000 b/d by the end of 2008, thus enabling the Group to achieve the first objective one year in advance.
Growth in reserves will be ensured by the appraisal campaigns of the various discoveries such as that of OMKO-1 in Gabon, and by continuing and stepping up the exploration drilling campaign.
At 31 July 2008, 3 wells were underway and another 9 wells are expected to be undertaken by the end of the year.
First half 2008 financial statements Assets EUR000 Notes 30/06/2008 31/12/2007 Intangible assets 4 538,904 554,922 Tangible assets 5 514,940 389,954 Non-current financial assets 6 100,100 28,216 Investments accounted under the equity method 7 35,838 3,138 Deferred tax assets 15 36,623 22,786 Non-current assets 1,226,405 999,016 Inventories 16,624 7,389 Trade receivables 54,537 52,852 Other current financial assets 6 40,380 29,671 Other current assets 45,565 42,615 Income tax receivable 15 1,496 7,074 Derivative instruments 8 2,650 5,430 Cash and cash equivalents 10 277,662 699,939 Current assets 438,914 844,970 Total Assets 1,665,319 1,843,986 Liabilities EUR000 Notes 30/06/2008 31/12/2007 Share capital 92,839 92,811 Issue, merger and acquisition premiums 201,174 201,139 Consolidated retained earnings 414,390 52,385 Treasury shares (85,898) (54,296) Net income, Group share 21,054 766,096 Shareholders’ equity, Group share 643,559 1,058,135 Minority interests 0 (342) Total equity: 643,559 1,057,793 Non-current provisions 11 36,777 30,795 Non-current bonds 12 355,660 336,932 Other non-current loans and borrowings 12 14,016 15,754 Non-current trade payables 0 3,624 Non-current derivative instruments 8 141,565 – Deferred tax liabilities 15 130,105 146,199 Non-current liabilities 678,123 533,304 Current bonds 12 6,542 13,089 Other current loans and borrowings 12 11,685 16,145 Trade payables 128,085 107,685 Income tax payable 15 3,986 121 Other payables and sundry liabilities 42,679 71,899 Current derivative instruments 8 132,066 22,274 Current provisions 11 18,594 21,676 Current liabilities 343,637 252,889 Total liabilities 1,665,319 1,843,986 Income statement EUR000 Notes 30/06/2008 30/06/2007 Sales 176,477 137,052 Other income 7,870 15,911 Purchases and change in inventory (11,381) (12,055) Other purchases and operating expenses (29,486) (48,105) Other taxes (5,100) (2,963) Payroll (15,393) (18,522) Amortisation and depreciation (42,436) (35,064) Impairment of exploration and production assets (10,303) (9,567) Provisions and impairment on current assets (621) (2,930) Reversals of operating provisions 1,498 2,012 Gains (losses) on sale of assets 16,200 (2,533) Other expenses (912) (1,665) Operating income 86,413 21,571 Gross cost of debt (13,948) (14,894) Income from cash 1,305 3,729 Net gains or losses on derivative instruments (33,065) (5,848) Net cost of debt (45,708) (17,013) Other interest income and expenses (2,950) 10,505 Financial income 14 (48,658) (6,509) Income before tax 37,755 15,062 Income taxes 15 (21,448) (862) Net income of consolidated companies 16,307 14,200 Total share in net income of 7 4,747 (341) equity-accounted companies Net earnings from continuing operations 21,054 13,859 Net earnings from discontinued operations 0 798,247 Net income of consolidated group 21,054 812,106 Net income — Group share 21,054 812,106 Minority interests 0 0 Earnings per share 16 Basic 0.18 6.80 Diluted 0.16 5.93 Earnings per share from discontinued operations Basic 0.00 6.68 Diluted 0.00 5.83 Earnings per share from continuing operations Basic 0.18 0.12 Diluted 0.16 0.10 Cashflow statement EUR000 Notes 30/06/2008 30/06/2007 Consolidated income from continuing 42,502 14,721 operations before tax Net amortisation, depreciation and 47,548 36,554 provision charges (write backs) Unrealised gains and losses related to 25,607 5,848 changes in fair value Exploration posted to expenses 10,859 9,567 Calculated income and expenses in relation 564 537 to stock options and similar items Other estimated income and expenses 10,669 1,123 Capital gains (losses) on disposals (20,486) 2,533 Share in income of equity-accounted companies 7 (4,747) 341 Income from cash 14 (6,734) (11,666) Cost of gross financial debt 1,785 3,063 Cash flow before tax 107,567 62,621 Tax (13,382) (13,254) Change in operating working capital (13,118) (33,989) – Trade receivables (9,368) (5,123) – Trade payables 24,361 (19,893) – Inventories (9,996) (6,751) – Other: (18,115) (2,222) Net cash flow from operating activities 81,067 15,378 Disbursements for acquisitions of tangible (243,102) (130,008) and intangible assets Receipts from sales of tangibles and 591 21 intangible assets Disbursements for acquisitions of 211 (762) financial assets (unconsolidated securities) Receipts from sales of financial assets 0 0 (unconsolidated securities) Business combination 0 0 Investments in equity-accounted companies 0 0 Change in loans and advances granted (72,290) (5,846) Other cash flows from investing activities (4,380) 0 NET CASH FLOW FROM INVESTING ACTIVITIES (318,970) (136,595) Amounts received from shareholders during (98) 2,880 capital increases Dividends paid (137,135) (143,885) Receipts from new loans 1,455 6,626 Interest paid (1,785) (3,063) Interest received 6,734 11,666 Loan repayments (4,810) (4,299) Treasury share acquisitions (31,601) (1,010) NET CASH FLOW FROM INVESTING ACTIVITIES (167,240) (131,085) Impact of foreign-currency fluctuations (15,919) (2,018) Net receipts from activities sold* 0 961,820 Net change in cash (421,062) 707,500 Opening cash and cash equivalents (694,307) 186,342 Closing net cash and cash equivalents from 0 sold activities Closing net cash and cash equivalents 10 273,245 893,842 Closing net cash and cash equivalents 0 from sold activities * Net cash flow from operating activities less capital expenditure and repayment of RBL
Maurel & Prom financial report, the consolidated financial statements with their notes can be consulted on Maurel & Prom site (http://www.maureletprom.com/).
This press release may contain forward-looking statements with respect to the financial condition, results of operations, business, strategy and plans of Maurel & Prom. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. These forward-looking statements are based on assumptions which we believe are reasonable but that could ultimately prove inaccurate and are subject to a number of risk factors, including but not limited to price fluctuations in crude oil; exchange rate fluctuations; uncertainties inherent in estimating quantities of oil reserves; actual future production rates and associated costs; operational problems; political stability; changes in laws and governmental regulations; wars and acts of terrorism or sabotage.
Maurel & Prom is listed on Euronext Paris – compartment A – CAC mid 100 Index Isin FR0000051070 / Bloomberg MAU.FP / Reuters MAUP.PA Agenda 2008 Thursday September 11, 2008 Analyst meeting Tuesday November 4, 2008 Third Quarter Sales 2008 Press releases to be distributed on each of the abovementioned days before the markets open Investor Relations Laurence Borbalan Tel. : +33-1-47-03-68-58 Mob. : +33-6-79-44-66-55 Laurence.Borbalan@fd.com Press Relations Michelle Aubert Tel. : +33-1-47-03-68-61 Mob. : +33-6-85-34-45-94 Michelle.Aubert@fd.com
Maurel & Prom
CONTACT: Investor Relations: Laurence Borbalan, Tel. :+33-1-47-03-68-58, Mob. : +33-6-79-44-66-55, Laurence.Borbalan@fd.com. PressRelations, Michelle Aubert, Tel. : +33-1-47-03-68-61, Mob. :+33-6-85-34-45-94, Michelle.Aubert@fd.com