Pacific Rubiales Announces Financial Results for the Quarter Ended June 30, 2009
Aug 13, 2009
TORONTO, Aug. 13 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE),
announced today the release of its unaudited consolidated financial results
for the three month period ended June 30, 2009, together with its Management's
Discussion and Analysis. These documents are posted on the company's website
and SEDAR: www.sedar.com.
Ronald Pantin, Chief Executive Officer, commented: "We are very pleased
with our second quarter results which continue to show strong production
growth, more than compensating for the significant weakness in the current oil
price when compared with the same period last year. This is largely due to our
almost 68% increase in production from the same period last year. This is an
achievement that demonstrates our leadership and growth potential among the
Colombian E&Ps. We remain focused on executing on our internal growth strategy
as the ODL pipeline construction is completed, on time and on budget, which
will allow us to take the Rubiales field to its full potential."
Management will hold a live conference call to discuss the company's
financial results on Friday, August 14 beginning at 9:00 am Bogota time or
10:00 am EDT. Analysts and interested investors are invited to participate as
follows:Conference call:
Participant Number (Toronto): 416-915-5761
Participant Number (toll free): 800-814-4860
Operating Summary
Three months ended June 30
2009 2009 2009 2008
Oil Gas Combined Combined
-----------------------------------------
Average daily production sold
(boe/day)(1) 34,428 5,283 39,711 20,504
-------------------------------------------------------------------------
Operating netback ($/boe)(2)
Crude oil and natural gas
sales price 48.05 25.44 45.05 85.93
Lifting costs 2.84 1.79 2.70 4.09
Transportation and other
costs 10.77 3.66 9.83 8.93
Upgrading cost (diluent
including transportation) 6.42 - 5.57 15.47
Other production costs 3.94 4.97 4.08 4.64
Overlift/Underlift(3) 6.19 0.49 5.44 (0.44)
-------------------------------------------------------------------------
Operating netback 17.89 14.53 17.43 53.24
-------------------------------------------------------------------------
(1) Natural gas conversion rate used was 6 mcf equals 1 barrel of oil
equivalent ("boe"). Boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead.
(2) Combined operating netback data based on weighted average daily
production sold which include diluents necessary for the upgrading of
the Rubiales blend.
(3) Corresponds to the effect of overlift position of 455,000 boe as of
June 30, 2009 amounting to $19.4 million, or a net combined effect of
$5.44 per boe in production costs.
Financial Summary
Three months ended
(in thousands of US$ except per share June 30,
amounts or as noted) 2009 2008
-------------------------------------------------------------------------
Net sales 160,994 158,567
Operating costs (79,238) (60,902)
Depletion, depreciation and amort. (43,231) (22,902)
-----------------------
Net Operating Income from Operations 38,525 74,763
General & administrative expenses (14,021) (11,049)
Other non-cash(1) items and taxes (143,044) (21,586)
-----------------------
Net lncome (Loss) for the period (118,540) 42,128
-----------------------
-----------------------
Interest expense and others 8,355 168
Income tax expense 1,802 32,535
Depletion, depreciation and amort. 43,231 22,902
Non cash unrealized loss on risk
management contract 28,227 -
Foreign exchange (gain) loss 85,235 (10,532)
-----------------------
EBITDA 48,310 87,201
-----------------------
Net Income per share - basic and diluted(2)
- basic (0.56) 0.21
- diluted (0.56) 0.19
Capital expenditures (include $12.2 million
of advances paid to suppliers) (83,640) (64,877)
Total assets 2,448,927 1,882,494
Fund flow from operations(3) 38,934 62,145
(1) Other non-cash items include:
a) The provision for an unrealized foreign exchange conversion loss
of $85.2 million due to the revaluation of the Colombian peso and
the Canadian dollar against the US$ during the period;
b) A provision to account for the overlift of 455,000 barrels of oil
and gas of $19.4 million which will be settled when the volumes
are balanced by an appropriate underlift;
c) A non-cash unrealized loss originated from the fair value
calculation of the risk management contracts of $28.2 million at
June 30, 2009; and
d) Others: interest expense/income of $8.4 million, income tax of
$1.8 million
(2) The weighted average number of common shares outstanding for the
three months and six months ended June 30, 2009 was 211,964,610 and
211,286,198, respectively, to calculate basic loss per share
(203,536,198 and 190,672,316 for the same respective periods in
2008). Diluted shares totaled 233,325,757.
(3) Calculated based on cash flow from operations before changes in
non-operating working capital.Second Quarter 2009 Results Summary
The results of the second quarter of 2009, and by implication those of
the first six months of 2009, reflect the continuous strength of the company's
operations.
During the second quarter, operated production of the company reached an
average of 71,533 boe/d, which is an increase of 28,829 boe/d over the same
period last year. This growth in operated production came mainly through the
increase in production at the Rubiales heavy crude oil field. By August 2,
2009, the production at Rubiales reached 65,000 bbl/d, making this the fastest
growing and also the highest producing field in Colombia. Production costs per
barrel continue to decrease, showing a 48% reduction over the same period last
year. This is evidence of management's commitment to cost control while
increasing production.
During the quarter, the marketing strategy of the company continued to
create value in spite of the lower oil prices as compared with the same period
last year. The company continued balancing volumes for export with volumes for
the internal market, thereby maximizing the revenue stream from an active
marketing and commercial strategy. During the second quarter of 2009, the
domestic market amounted to an average volume of 5,302 bbl/d.
As a result of the significant increase in production, and even with the
relatively lower prices for oil and gas during the second quarter of 2009
compared with the same period last year (WTI $60.32/bbl versus $133.88/bbl),
the company was able to generate the same level of revenues for the period
($160.9 million in 2009, $158.6 million in 2008). These revenues and the
operational successes that allowed the company to achieve these revenues were
also impacted by a number of financial charges arising from financial and
non-cash items which will level off during the course of the year. These
non-cash financial charges reflect mainly foreign exchange risks associated
with future income taxes liabilities, which may or may not materialize, and
the effect of overlift volumes that are a reflection of the company having
marketed, for operational reasons, greater volumes than its equity
participation in production. This overlift is anticipated to be cancelled out
over the short term.
The company continues to move forward with its comprehensive investment
and exploration plans, focused on the development of the Rubiales Master Plan.
As of August 2, 2009, the ODL pipeline was mechanically completed and in the
final stages of hydrostatic testing. The 'Early Pumping' phase is anticipated
to begin by the end of August 2009. The production and processing capacity at
the Rubiales field is on track to fulfil the production goal of 100,000 bbl/d
by the end of the year, as previously stated.Year to date highlights
- On March 3 2009, the company announced the independently certified
Statement of Reserves Data and Other Oil and Gas Information for all
of the company's assets, which estimated gross working interest
proved plus probable (2P) reserves to be 247 mmboe. Proven reserves
increased 50%, from 136 mmboe at the end of 2007, to 204 mmboe at the
end of 2008. These reserves represent almost one barrel of net proven
reserves (P1) per outstanding share.
- During the second quarter of 2009, the company continued to show it
is the most dynamic E&P company operating in Colombia, with an
average production of 71,533 boe/d, an increase of 28,829 boe/d
(9,474 boe/d net) over the same period of 2008. This growth in
operated production came through increases in the Rubiales field
production and development of other assets.
- During the second quarter of 2009 the company drilled the Abanico 20,
RUB-150, RUB-220 RUB-221, RUB-222 and RUB-224 appraisal wells, and
the Mirla Negra 1 exploratory well, all with positive production
results.
- The company concluded negotiations with Ecopetrol which resulted in
the signature of a binding Memorandum of Understanding ("MOU") on
April 7, 2009, to pursue the evaluation of Synchronized Thermal
Additional Recovery "STAR" technology at the Rubiales field. The
MOU not only outlines the mechanism by which both companies will
ascertain the success of the tests and pilot project, but also
establishes a path forward to the structuring of an eventual contract
between the two parties for the commercial application of the
technology, for duration of the economic life of the Rubiales field.
- During the second quarter 2009 the company handled an average of
28,795 bbl/d (a 244% increase from the average for the second quarter
of 2008) through the new facility in Guaduas (PF2), generating
revenues of $4.5 million.
- The construction of the Rubiales Pipeline "Oleoducto de los Llanos
Orientales" ("ODL") has shown significant progress during the second
quarter of 2009. The ODL project's progress reached 82% and a
strategy has been developed for the Early Pumping of the pipeline
which will generate additional cash flow for the company while
allowing ODL to complete the project one month ahead of schedule.
- In the second quarter of 2009, revenues increased to $160.9 million
from $158.6 million in the second quarter of 2008, primarily due to a
substantial increase in production, despite the lower realized crude
oil prices in the second quarter of 2009 when compared with the same
period 2008.
- EBITDA during the six months of 2009 totalled $98.1 million while for
the second quarter of 2009 EBITDA amounted to $48.3 million. EBITDA
from international sales represented 71% of this amount, while EBITDA
from gas and domestic sales contributed 19% and 10%, respectively.
- On May 5, 2009 the company closed on initial commitments totalling
$180 million under a previously announced senior secured revolving
credit facility of up to $250 million. The facility consists of
$50 million commitments from each of BNP Paribas, Calyon and Banco
Davivienda S.A. and $30 million from West LB A.G., each a lead
arranger for the facility. The company expects to use the proceeds
from the facility for the development of its oil infrastructure
(including costs of drilling, oil dehydration and water treatment) to
increase the production capacity of the Rubiales and Piriri fields up
to 100,000 gross bbl/d by the end of 2009, as well as for general
working capital purposes and the repayment of short-term debt. The
company has received the entire $180 million from this loan during
the second quarter of 2009.
- Total cash capital expenditures during the first six months of 2009
totalled $149.0 million ($184.5 million in the cash flow which
excludes the 40% taxable benefit in Colombia). The actual cash
capital expenditures of the period were $71.4 million (net of the 40%
taxable benefit in Colombia) of which $14.9 million went into
exploration activities including seismic, aerogravimetry,
aeromagnetometry and drilling ($8.4 million to geophysics and
$6.5 million to drilling of wells); $31.6 million were invested in
the expansion and construction of production infrastructure and
$24.9 million in production drilling activities.Pacific Rubiales, a Canadian-based company and producer of natural gas
and heavy crude oil, owns 100 percent of Meta Petroleum Corp., a Colombian oil
operator which operates the Rubiales and Piriri oil fields in the Llanos Basin
in association with Ecopetrol S.A., the Colombian national oil company. The
company is focused on identifying opportunities primarily within the eastern
Llanos Basin of Colombia as well as in other areas in Colombia and northern
Peru. Pacific Rubiales has a current net production of approximately 34,000
barrels of oil equivalent per day, with working interests in 32 blocks in
Colombia and Peru.
Boe may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
Cautionary Note Concerning Forward-Looking Statements
This press release contains forward-looking statements. All statements,
other than statements of historical fact, that address activities, events or
developments that the company believes, expects or anticipates will or may
occur in the future (including, without limitation, statements regarding
estimates and/or assumptions in respect of production, revenue, cash flow and
costs, reserve and resource estimates, potential resources and reserves and
the company's exploration and development plans and objectives) are
forward-looking statements. These forward-looking statements reflect the
current expectations or beliefs of the company based on information currently
available to the company. Forward-looking statements are subject to a number
of risks and uncertainties that may cause the actual results of the company to
differ materially from those discussed in the forward-looking statements, and
even if such actual results are realized or substantially realized, there can
be no assurance that they will have the expected consequences to, or effects
on the company. Factors that could cause actual results or events to differ
materially from current expectations include, among other things: uncertainty
of estimates of capital and operating costs, production estimates and
estimated economic return; the possibility that actual circumstances will
differ from the estimates and assumptions; failure to establish estimated
resources or reserves; fluctuations in petroleum prices and currency exchange
rates; inflation; changes in equity markets; political developments in
Colombia or Peru; changes to regulations affecting the company's activities;
uncertainties relating to the availability and costs of financing needed in
the future; the uncertainties involved in interpreting drilling results and
other geological data; and the other risks disclosed under the heading "Risk
Factors" and elsewhere in the company's annual information form dated April 1,
2009 filed on SEDAR at www.sedar.com. Any forward-looking statement speaks
only as of the date on which it is made and, except as may be required by
applicable securities laws, the company disclaims any intent or obligation to
update any forward-looking statement, whether as a result of new information,
future events or results or otherwise. Although the company believes that the
assumptions inherent in the forward-looking statements are reasonable,
forward-looking statements are not guarantees of future performance and
accordingly undue reliance should not be put on such statements due to the
inherent uncertainty therein.
%SEDAR: 00007953E
For further information:
For further information: Mr. Ronald Pantin, Chief Executive Officer and Director, Mr. Jose Francisco Arata, President and Director, (416) 362-7735; Ms. Belinda Labatte, (647) 428-7035