C&C Energia Reports Second Quarter Operating and Financial Results
CALGARY, ALBERTA--(Marketwire - Aug. 13, 2012) - C&C Energia Ltd. ("C&C Energia" or the "Corporation") (CZE.TO) is pleased to report its operating and financial results for the three and six months ended June 30, 2012.
Average daily production for the second quarter 2012 was 10,504 barrels of oil per day ("bopd"), a 27% increase over the same period in 2011. Production continues to increase with current production rates of approximately 11,500 bopd.
Funds flow from operations for the three months ended June 30, 2012 was $0.46/share or $29.1 million, an increase of 10% from the prior year period. During the second quarter 2012, C&C Energia realized an average price of $106.60 per barrel on its sales, generating operating netbacks of $57.83 per barrel. The Corporation has a strong balance sheet with a $42.0 million adjusted working capital surplus (including $87.0 million in cash) and no debt. Crude inventory levels remained high during the second quarter of 2012 as a result of lower liftings at the Port of Covenas for the month of June.
Average production for 2012 remains forecast at approximately 10,500 bopd, generating approximately $160 million in after tax cash flow based on an expected realized price of $93.50 per barrel.
C&C Energia will be filing its interim financial statements and management's discussion and analysis as at and for the three and six months ended June 30, 2012, which will contain detailed information regarding the Corporation's results. When filed, these documents will be available for review under C&C's profile on the SEDAR website at www.sedar.com.
FINANCIAL & OPERATIONAL HIGHLIGHTS
(All references to $are to United States dollars unless otherwise noted.)
Three Months Ended Six Months Ended June
June 30, 30,
(unaudited) 2012 2011 2012 2011
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Operating (thousands of US$, except share, per share,
per bbl and bopd amounts)
Operating cash flow (1) 43,575 46,016 104,374 72,117
Average crude oil volumes
(before royalties)
Production (bopd) 10,504 8,259 10,448 6,851
Sales (bopd) 8,898 8,093 9,840 6,835
Average reference price
WTI ($ per bbl) 93.30 102.06 98.18 98.27
Operating netback ($ per
bbl) (4)
Average realized price (5) 106.60 111.60 109.25 105.29
Royalties (12.83) (14.68) (12.91) (14.03)
Production expenses (15.05) (17.26) (16.76) (17.44)
Transportation expenses (20.89) (15.60) (18.52) (13.21)
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Operating netback (4) 57.83 64.06 61.06 60.61
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Financial
Oil revenues (net of
royalties) 75,930 71,374 172,533 112,893
Funds flow from operations
(2) 29,095 26,453 70,787 50,094
Per share - basic ($) 0.46 0.44 1.11 0.88
Per share - diluted ($) 0.46 0.43 1.11 0.85
Net income 26,802 23,309 40,271 22,266
Per share - basic ($) 0.42 0.39 0.63 0.39
Per share - diluted ($) 0.42 0.38 0.63 0.38
Capital expenditures 53,308 44,540 101,999 78,737
Total assets 562,303 476,734 562,303 476,734
Debt - - - -
Adjusted working capital
surplus (3) 42,037 66,389 42,037 66,389
Common shares outstanding
Basic 63,842,053 63,842,503 63,842,053 63,842,503
Fully Diluted 70,131,671 69,364,172 70,131,671 69,364,172
Weighted average common
shares outstanding
Basic 63,842,503 59,692,503 63,842,503 57,039,713
Diluted 63,858,039 61,249,283 63,974,837 58,756,361
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Notes (See "GAAP, Additional GAAP and Non-GAAP Measures", below,
(1) Operating cash flow is oil revenues less royalties, operating expenses,
transportation expenses and administration expenses. Operating cash flow
is a non-GAAP measure (as defined herein) because it is not presented in
the 2011 annual consolidated financial statements.
(2) Funds flow from operations is cash flow from operating activities before
changes in other non-cash working capital items. Funds flow from
operations is an additional GAAP measure because it is presented in Note
12 to the Corporation's 2011 annual consolidated financial statements.
(3) Adjusted working capital surplus includes current assets less current
liabilities excluding risk management contracts (unrealized gains
(losses) on commodity swaps) and deferred taxes. Adjusted working
capital surplus is a non-GAAP measure because it is not presented in the
2011 annual consolidated financial statements.
(4) Operating netback is determined by dividing oil sales revenues less
royalties, production expenses and transportation expenses by sales
volumes. Netbacks are calculated by subtracting royalties, production
expenses, transportation expenses, administrative expenses, interest and
taxes paid by the Corporation from crude oil revenue and dividing by
sales volumes. Operating netback is a non-GAAP measure because it is not
presented in the 2011 annual consolidated financial statements.
(5) Excludes impact of risk management contracts (unrealized gains (losses)
on commodity swaps).
FINANCIAL & OPERATIONAL HIGHLIGHTS
-- Increased average second quarter 2012 production to over 10,500 bopd, an
increase of 27% from the same quarter of 2011 and on par with the first
quarter of 2012. Production for the first six months of 2012 averaged
10,448 bopd which was 50% higher than for the six months ended June 30,
2011. Current production levels are approximately 11,500 bopd.
-- Funds flow (after tax) from operations for the second quarter was
$0.46/share or $29.1 million, an increase of 10% above the second
quarter of 2011. Funds flow decreased $12.6 million from the first
quarter of 2012 as a result of higher crude inventory levels at the end
of the second quarter and one-time trucking stand-by costs of $4.4
million related to loading restrictions at terminals due to
interruptions in the pipeline system. Approximately $1.4 million in
trucking stand-by costs have been deferred and included in the inventory
valuation. Funds flow for the six month period ended June 30, 2012 was
$70.8 million up over 40% from the $50.1 million for the same period in
2011.
-- Net income for the second quarter of 2012 was $26.8 million compared to
net income of $23.3 million in the second quarter of 2011. Reflected in
the current quarter net income are net realized and unrealized gains on
commodity hedges of $13.4, including $3.3 million of premium costs to
unwind existing risk management contracts. The Corporation has no
further economic exposure under any risk management contracts. Net
income for the six month period ended June 30, 2012 was $40.3 million,
which represents an increase of over 80% that of the same period in
2011.
-- Operating netbacks for the three months ended June 30, 2012 were $57.83
per barrel based on an average realized price of $106.60 per barrel.
-- During the second quarter 2012, the Corporation completed drilling six
wells, four exploration wells (Tormento-1, Greta Oto-1, Lagarto-1 and
Saimiri-1) and two appraisal wells (Zopilote 8 and 11), resulting in
five oil wells and one dry hole.
OPERATIONAL REVIEW
C&C Energia has 8 blocks (7 operated) in Colombia with a total of 626,000 acres (508,000 net acres). The Corporation's lands are located in the Llanos Basin (4 blocks), Middle Magdalena Valley (1 block), and Putumayo Basin (3 blocks).
During the second quarter of 2012, the Corporation invested $53.3 million primarily in the following areas: drilling and completion $28.8 million, workovers $7.5 million, civil works $9.1 million, facilities and roads $6.1 million and general property and capitalized G&A of $1.8 million.
Llanos Basin
On the Cachicamo Block, the Monarca-1 exploration well reached TD of 8,650 feet on July 11, 2012. Electric logs indicated non-commercial oil quantities in the C5 and Gacheta formations. The well was subsequently plugged and abandoned. Additionally, the Maquito-1 well reached TD of 6,747 feet on July 31, 2012. Electric logs indicated lack of oil and the well was subsequently plugged and abandoned.
The Tormento-1 well discovery in the Llanos 19 Block, announced previously, has been placed on long-term test in the Mirador formation. Further delineation drilling of the Tormento discovery will commence in late 2012 or early 2013.
Putumayo Basin
3D seismic is currently being acquired in the Putumayo 8 Block which is operated by Vetra (50% Vetra / 50% C&C ownership).
CAPITAL AND OUTLOOK
The Corporation has approved a capital investment budget for 2012 of between $150 and $165 million. The Corporation expects to invest funds as follows: seismic, approximately $4 million to $6 million; drilling, completions and testing approximately $102 million to $107 million; field development and work-overs approximately $17 million; facilities and equipment approximately $27 million to $30 million; and $5 million for various other projects. Average daily production for 2012 remains forecast at approximately 10,500 bopd, a 24% increase over the 2011 annual average daily production. The Corporation plans to drill 18 to 19 wells in 2012.
ABOUT C&C ENERGIA LTD.
The Corporation, through its subsidiary Grupo C&C Energia (Barbados) Ltd., is engaged in the exploration for and the development and production of oil resources in Colombia. Its strategy is to develop producing oil assets by appraising and developing existing discoveries and exploring in areas assessed by management to be of low to moderate risk. With a total of eight blocks (seven operated) and over 626,000 acres (508,000 net acres) in Colombia, the Corporation's management expects that C&C Energia has considerable upside for future production and reserve growth.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release contains forward-looking information within the meaning of applicable Canadian securities laws that involves known and unknown risks and uncertainties. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", "will", "plans" or similar words suggesting future outcomes. The Corporation cautions readers and prospective investors in the Corporation's securities to not place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by C&C Energia.
Forward-looking information in this press release includes, but is not limited to, information concerning the expectations of the Corporation with respect to future production (including the estimated average production for 2012 and expected after tax cash flow for 2012), the Corporation's drilling plans and management's expectations regarding potential future production and reserve growth. These forward-looking statements are subject to assumptions regarding the Corporation's operations and the operating environment in Colombia. The Corporation's drilling and seismic plans are subject to change if circumstances change or if management of the Corporation determines that other business plans are more appropriate. In particular, the Corporation's expectations regarding average production for 2012 are based on assumptions that there will be no material disruptions to its operations or material difficulties in delivering oil during the year. Expectations regarding cash flow for 2012 are based on an expected average realized oil price of approximately $93.50 and on assumptions that production and sales will be as forecast and that there will not be any material increases to operating costs for the period.
Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by C&C Energia including, but not limited to, general risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with the negotiating with the Agencia Nacional de Hidrocarburos (ANH) or with other third parties in countries other than Canada and the risk associated with international activity. The forward-looking information included in this news release is expressly qualified in its entirety by this cautionary statement. The forward-looking information included herein is made as of the date hereof and C&C Energia assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.
GAAP, ADDITIONAL GAAP AND NON-GAAP MEASURES
The Corporation's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") which are generally accepted accounting principles for publicly accountable enterprises in Canada ("GAAP").
This report makes reference to the terms that do not have a standardized meaning prescribed by GAAP and accordingly, the Corporation's use of these terms may not be comparable to similarly defined measures presented by other companies.
Additional GAAP Measures
The term "funds flow from operations" is an additional GAAP measure because it is presented in Note 12 to the annual consolidated financial statements. Funds flow from operations is cash flow from operating activities before changes in non-cash working capital.
Non-GAAP Measures
The terms "operating cash flow", "operating netbacks", "netbacks" and "adjusted working capital", are non-GAAP measures because they are not presented in the 2011 annual consolidated financial statements. Operating cash flow is oil revenues less royalties, operating expenses, transportation expenses and administration expenses. Operating netback is determined by dividing oil sales revenues less royalties, production expenses and transportation expenses by sales volumes. Management considers netback and operating netback important as it is a measure of profitability per barrel sold and reflects the quality of production. Netbacks are calculated by subtracting royalties, production expenses, transportation expenses, administrative expenses, interest and taxes paid by the Corporation from crude oil revenue and dividing by sales volumes. Adjusted working capital surplus includes current assets less current liabilities, excluding risk management contracts (unrealized gains (losses) on commodity swaps) and future taxes and is used to evaluate the Corporation's financial leverage.
Management uses these additional and non-GAAP measurements for its own performance measures and to provide its shareholders and potential investors with a measurement of the Corporation's efficiency and its ability to fund a portion of its future growth expenditures.
