Report for first quarter 2007

Transcription

1 Report for first quarter 2007 Highlights Q Ener s share of Jotun production was boepd, compared with boepd in the first quarter last year. The average realized oil price was USD/barrel. Operating revenues are NOK 182 million (0). Operating income is NOK 31 million, compared with minus NOK 5 million last year. The quarter is negatively influenced by proportionally higher operating cost than what is expected for the full year. The Dana Petroleum voluntary offer to purchase all outstanding shares, warrants and options of the Company was withdrawn on January 12. The final financial settlement with Shell regarding the PL027B transaction is completed. Signed agreement with British Gas to acquire its 25 per cent interest of PL 337 on the Norwegian Continental Shelf. The Company has been informed by the MPE that the license Ener Petroleum applied for in the APA 2006 is intended to be awarded in a second phase of the APA license round expected to take place during the second quarter of Events after Q1 Ener completed on 25th of May a bond issue of NOK 300 million. Applied for listing on Oslo Axess. Ener s 2P reserve estimates per for the Jotun field increased from 11.3 to 11.7 million barrels. Ener s estimate for risked prospective resources (prospects and leads) increased to 31.9 million barrels. Outlook An exploration well is approved to be drilled on PL 337 in the third quarter of Continuing equity funding and IPO.

2 Key figures (NGAAP) Full year Figures in MNOK Q Q Operating revenues EBITDA 58.7 (4,7) (17.5) (7.3) Operating income 31.5 (4.7) (30.9) (7.3) Net income (4.5) (1.9) (14.6) (2.3) EBITDA margin (%) 32% Operating income margin (%) 17% Oil and gas production (boe) *) Proved reserves, P50 (mill. barrels) 11.7 **) *) Jotun production for corresponding first quarter 2006 for comparison. **) Remaining reserves as per Financials Operating revenues amounted to NOK million in the first quarter 2007 and comprise revenues from sales of oil and gas from the Jotun field, as well as tariff revenues from the Ringhorne field. Revenues for the same period last year was recorded as part of the acquisition price for the Jotun field. The operating income is influenced by higher operating cost for the first quarter than what is budgeted for the second half of This is explained by lower contractual lease cost for the Jotun FPSO effective from July Operating income has increased to NOK 31.5 million in first quarter 2007 from minus NOK 4.7 million in first quarter previous year, mainly due to the operations of the Jotun field. EBITDA was increased to NOK 58.7 million in the first quarter 2007 compared to minus NOK 4.7 million last year. This increase is caused by the inclusion of the operational results from the Jotun field. Net financial items of NOK 1.4 million together with a total tax charge of NOK 37.4 million reduced the net income to minus NOK 4.5 million in the first quarter 2007 compared to minus NOK 1.9 million in The Company therefore can report an operating income margin and EBITDA margin of 17 per cent and 32 per cent respectively for the first quarter of No similar margins can be reported for the same period last year as Ener had no financial operating revenues for that period. Exploration expenses amounted to NOK 1.5 million in the first quarter this year compared to NOK 0.1 million last year. Development investments related to the Jotun field amounted to NOK 9 million in the first quarter this year. Of taxes payable reported in the balance sheet an amount of NOK 388 million is taxes for 2006 that are payable in December Hereof an amount of NOK 138 million was for the profit-and-loss-account related to the Jotun FPSO. Consequently, the taxes from operating activities in 2006 were NOK 250 million. For the first quarter 2007, taxes payable are amounting to NOK 77 million, of which an amount of NOK 28 million is related to the profit-and-loss-account related to the Jotun FPSO. Cash flow from operating activities was negative with NOK 31.5 million in the first quarter 2007, mainly caused by a significant increase in accounts receivable related to sale of crude oil, compared with a negative cash flow from operating activities of NOK 4.7 million in the first quarter 2006.

3 Operations Licence portfolio Ener Petroleum has a participating interest in two production licenses on the Norwegian Continental Shelf: Production License Block Field Interest share % Operator License period PL 027B 25/8 Jotun *) 50% ExxonMobil PL 337 **) 15/11,15/12, 16/10 25 Petera ***) *) The 50% share in PL 027B give Ener a 45% share in the unitized Jotun Field. **) Pending MPE approval. ***) License period can be extended depending upon exploration success. Reserves and resources Ener Petroleum s asset portfolio consists of a balance of reserves in production in the Jotun Field together with exploration acreage with exiting prospects and leads in PL 027B and PL 337. Resource category 8 and 9 comprises prospects and leads that have been mapped and thus allow estimation of volumes. These prospective resources have then been multiplied by a probability of discovery calculated by Ener Petroleum in accordance with normal industry practice. Ener Petroleum s current estimate for Proved plus Probable reserves from the Jotun Field is 11.7 million barrels, compared to earlier reported numbers of 11.3 million barrels (as per ). The increase in the Company s reserve estimate for Jotun is a result of an increased understanding of the sub-surface of the field. Ener s reserves estimates for the Jotun field has been independently verified by Aker Kvaerner Geo AS. Figures in million barrels NPD Resource category Proved plus Probable (2P) reserves (P50) Proved plus, Probable plus, Possible (3P), reserves (P10) Risked Prospective resources NPD s Classification Proved (1P) reserves (P90) 1 In production Prospects Leads 9.3 Production January February March 1Q Q 2006 Oil (barrels) Gas (boe) Total (boe) Average (boepd) Ener s share of oil and gas production from it s 45 per cent ownership of the Jotun field was boe. This includes an in kind compensation element from the Ringhorne field to the Jotun owners as a function of the tie-in and service agreement between Ringhorne and Jotun. The Jotun production during the first quarter of 2007 has been somewhat unstable as a result of demobilization activities on the Jotun B platform following the drilling campaign in the second half of The Jotun Field is planned to produce until The average crude oil sales price in the first quarter of 2007 was (USD/ bbl): January: February: March: Q Average: 59.20

4 Business development The acquisition of the Jotun Field has given Ener an excellent production base and pre-tax cash flow to build and expand it s activities in a tax efficient way on the Norwegian Continental Shelf as well as in other mature areas of the North Sea basin, such as the UK shelf. Ener s strategy is to use the considerable pre-tax cash flow generated by the Jotun production for tax efficient investments in particular directed towards strengthening the Company s portfolio of exploration assets. In addition Ener will continue to participate in licensing rounds such as the APA and 20th rounds. In March 2007 Ener Petroleum signed a sales and purchase agreement with British Gas Norge AS for the acquisition of it s 25 per cent license share of PL337. The acquisition is subject to partner acceptance and MPE approval. The license covers parts of block 15/11, 15/12 and 16/10, and contains several prospects and leads. Drilling of two of the most interesting prospects will be commenced in the third quarter of 2007 by the jack-up Mærsk Giant. Ener Petroleum prime license applied for in APA 2006 was not awarded in the authorities regular license award in January Ener has been informed by the Ministry of Petroleum that this license is intended to be awarded in a second phase of license awards expected to take place during the second quarter of Special events Dana Petroleum s offer of December 2006 was withdrawn on January 12, 2007.

5 Outlook Ener s strategic focus is the second hand market for licenses in the more mature areas of the Norwegian Continental Shelf, and to some extent in the broader North Sea area. As the availability of interesting projects is limited and the competition high, Ener will follow closely the merger of Statoil/Hydro in order to be in position to capture any business opportunities following a potential portfolio restructuring in the wake of the merger. Ener has an asset base dominated by late life production, and a more balanced portfolio of assets is now actively being targeted. Ener is currently negotiating with other licensees on the Norwegian Continental Shelf regarding possible acquisition or farm-in to new licenses with active exploration programs and/or production ongoing. In addition, the Company has already started technical screening work for the 2007 APA round in Norway. Ener will continue to work with the Jotun operator, ExxonMobil, both to identify upside opportunities as well as to investigate various solutions to arrest the production decline of the field. On PL027B the Company is working with the operator ExxonMobil with the common aim of drilling an exploration well on one of the license prospects in Ener Petroleum will also continue it s independent subsurface work on the license in order to mature other prospects towards a possible drilling decision. Ener is currently in the process of recruiting more experienced personnel, in order to handle the Company s increased activity level as well as our strong growth ambitions. Ener has issued a bond amounting to NOK 300 million. The proceeds from the bond issue will be made available to the Company upon injection of minimum NOK 250 million new equity and will be used to refinance existing debt and general corporate purposes (Fondsfinans and Pareto managers). The company has applied for listing on Oslo Axess and is planning to raise a minimum of NOK 250 million in equity (Fondsfinans manager). This should secure a good financial position with necessary flexibility to take advantage of new opportunities coming up in the near to medium term future. The Company s auditor has not reviewed this report. Lysaker, 30 May 2007 The Board of Directors of Ener Petroleum ASA

6 Ener Petroleum ASA Income Statement Unaudited Interim Income Statement (NGAAP) for the three months ended 31 March (Amounts in NOK 1000) Three months ended 31 March 2007 Three months ended 31 March 2006 Year ended 31 December 2006 Sale of petroleum products Tariff revenues Other operating revenues Operating revenues Production expenses ( ) - (34 784) Change in stocks (1 349) Exploration expenses (1 454) (137) (6 113) Depreciation (27 227) (24) (13 360) Salaries and related (5 380) (1 942) (9 997) Other operating expenses (3 537) (2 625) (16 464) Operating expenses ( ) (4 728) (43 367) Operating income (4 728) (30 881) Interest income Other financial income Interest expense (6 293) - (1 101) Other financial expense (2 028) (10) (24 668) Net financial items (17 879) Ordinary income before taxes (4 319) (48 760) Income tax (charge) / credit (37 351) Net income for the period (4 521) (1 861) (14 571) Attributable to: Equity holders of the Company (4 521) (1 861) (14 571) Earnings / (loss) per share: basic (4.11) (1.69) (13.25) diluted (4.11) (1.69) (13.25)

7 Ener Petroleum ASA Balance Sheet Unaudited Interim Balance Sheet (NGAAP) at 31 March 2007 (Amounts in NOK 1000) 31 March March December 2006 ASSETS Non-current assets Deferred tax asset Production rights Production facilities Property, plant and equipment Pension rights Other financial assets Total non-current assets Current assets Accounts receivable Other receivables Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Share premium Other paid-in-capital Retained earnings (21 397) (4 167) (16 877) Total equity Liabilities Non-current liabilities Provision for asset retirement obligation Deferred tax Pension liabilities Total non-current liabilities Current liabilities Interest-bearing loan Trade and other payables Income tax payable Other current liabilities and overlift Total current liabilities TOTAL EQUITY AND LIABILITIES

8 Ener Petroleum ASA Cash Flow Statement Unaudited Interim Cash Flow Statement (NGAAP) for the three months ended 31 March (Amounts in NOK 1000) Cash flow from operating activities Three months ended 31 March 2007 Three months ended 31 March 2006 Profit before income tax (4 319) Depreciation Share-based expense Other (479) Interest received Interest paid (6 293) - Amortized cost - - Changes in assets and liabilities: Trade and other receivables ( ) (2 788) Trade and other payables Cash flow from operating activities (31 498) (4 714) Cash flow used for investment activities Investment in production rights, adjustment Purchases of property, plant and equipment (PPE) (9 780) (32) Cash flow used for investment activities (1 344) (32) Cash flow from financing activities Proceeds from issuance of shares - - Proceeds from issuing shares to employees - - Proceeds from issuance of bank loan - - Repayment of interest-bearing loan (30 000) - Proceeds from exercise of options - - Cash flow from financing activities (30 000) - Net change in cash and cash equivalents (62 842) (4 746) Cash and cash equivalents beginning of the period Cash and cash equivalents end of the period

9 Ener Petroleum ASA Changes is Equity Unaudited Interim Statement of Changes in Equity for the three months ended 31 March 2007 (Amounts in NOK 1000) Share capital Share premium Other paidin-capital Retained earnings Equity at 1st January (16 877) Profit / (loss) for the period (4 521) (4 521) Share-based payment, options Equity at 31st March (21 397) Total for the comparable three months ended 31 March 2006 (Amounts in NOK 1000) Share capital Share premium Other paidin-capital Retained earnings Equity at 1st January (2 306) Profit / (loss) for the period (1 861) (1 861) Share-based payment, options - - Equity at 31st March (4 167) Total Interim Statement of Changes in Equity for the year ended 31 December 2006 (Amounts in NOK 1000) Share capital Share premium Other paidin-capital Retained earnings Equity at 1st January (2 306) Profit / (loss) for the period (14 571) (14 571) Share-based payment, options - - Equity at 31st March (16 877) Total

10 Ener Petroleum ASA Notes to the interim financial statements for the three months ended 31 March 2007 Note 1 - Basis of preparation These financial statements are the interim condensed financial statements of Ener Petroleum ASA for the three months ended 31 March The interim financial statements of the Company have been prepared in accordance to NGAAP. These financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company s annual financial statements for the year ended 31 December These financial statements and the associated depreciation charges have been prepared using an independent third party verification of the reserves that was carried out in May Note 2 - Significant accounting policies The accounting policies adopted are consistent with those followed in the preparation of the Company s annual financial statements for the year ended 31 December 2006, except for share-based payment, see note 9 below. Note 3 - Segment reporting The Company has identified its reportable segments based on the nature of the risk and return within its business. The only business segment is oil and gas, and the only geographical segment at 31 March 2007 is the Norwegian Continental Shelf. Note 4 - Other financial assets The Company has paid NOK 5.7 million in returnable annual funding related to decommissioning security. Note 5 - Other receivables 1000 NOK Prepayments Over-/under cash call Underlift - - Value added tax Working capital in the licenses Accrued settlement from acquisition of Jotun Total Note 6 - Interest-bearing loan The liability comprise a loan amounting to USD 36 million. USD 5 million has been repaid in first quarter The residual loan is due for payment during 2007, with the last repayment in August NOK Principal (USD 36 mill.) Accumulated unrealized exchange loss / (gain) (564) Repayment (30 000) - Carrying amount at balance date

11 Note 7 - Other current liabilities and overlift 1000 NOK Working capital in the licenses Overlift Accrued vacation pay Other accruals Total Note 8 - Comparatives Net Profit Interest (NPI) tax in the Income Statement is classified as production expenses in the first quarter For the financial year 2006, this was classified as tax expenses. Amounts for the financial year 2006 are not reclassified. NPI-tax in first quarter 2007 was NOK 12.6 million (charge), and NOK -9.6 million (credit) for Note 9 - Share-based compensation The Company has changed the accounting principle for Share-Based Payment under NGAAP in 2007, which is in accordance with IFRS 2 Share-Based Payment. The Company has issued equity settled share-based compensation to its employees and the fair value of share option plans are calculated at grant date using the Black Scholes model. In accordance with IFRS 2 Share-Based Payment, the resulting cost is recognized in the income statement, together with a corresponding increase in equity, over the vesting period of the options, based on the number of options that are expected to vest. Expense arising from share-based payment, equity settled options, is NOK from financial year 2006 and NOK million in first quarter The total of NOK is expensed in first quarter The Company has approved 1 option plan under which equity settled options are granted to employees. The plan was approved in 2006 and the options under this plan were granted in 2006 at an exercise price above the market value per share. The options vest over a period of 6 months from the grant. Options granted generally expire 4 years after the grant date. The outstanding options at 31 March 2007 are subject to the following conditions: Expiry date Number of options Exercise price 20 June June Outstanding at 31 March The fair value calculations of the options are based on the following assumptions: Estimated volatility 60 % Expected life (in years) 2 Risk free interest rate 3.8 % Share price at grant (NOK) 1) Exercise price (NOK) 2) ) NOK 83 for options and NOK 127 for options 11

12 About Ener Petroleum Ener Petroleum ASA was incorporated in 2005 and received prequalification as a licencee on the Norwegian Continental Shelf in Ener s ambition is to build a balanced portfolio of producing, developing and exploration assets in Norway and abroad through commercial transactions and participation in licensing rounds. Ener Petroleum s headquarter is located at Lysaker outside Oslo, Norway. OFFICE MAIL ADDRESS: VISITING ADDRESS: Phone: Fax: URL: Post Office Box 128 N 1325 Lysaker Norway Lysaker Torg 5 Lysaker (Oslo) Norway