2007 results: 6.5% growth in revenue and 35% rise in net profit to $0.55 per share
Fri Apr 4, 2:54 PMTSX: PBC
MONTREAL, April 4 /CNW Telbec/ - PEBERCAN INC. (the "Company"), (TSX: PBC.TO) is pleased to present its results for the period ended December 31, 2007. All amounts appearing in this release are expressed in US dollars.
Highlights:
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2007 Performance (compared to 2006):
- Sales: +6.5% to $118.91 million
- Operating results: +32.20% to $57.46 million
- Income: +35% to $41.28 million
- Net margin: 34.70% of oil sales
- Proven reserves: 10.1 Mbbl (net: 9.94 Mbbl)
- Proven and probable reserves: 13.37 Mbbl
- Internally generated funds: +7.88% to $91.18 million
- Wells in production at the end of fiscal 2007: 40
- Total Block 7 production: 7.215 Mbbl, or +6% over 2006*
*Excluding Santa Cruz catch-up invoicing performed in 2006
Strong growth in income
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For the period ended December 31, 2007, Pebercan had total sales of $118.9
million, compared to $111.7 million in 2006. Revenue generated by oil sales
was $118.9 million, compared to $108.1 million in 2006. This figure breaks
down as $44.18 million in profit oil and $74.75 million in cost recovery. The
growth of this activity was primarily due to the significant increase in the
price per barrel.
Block 7 production stood, in fact, at 7,215,046 bbl in 2007 (or
19,767 bbl/day), up 0.4% over 2006 and up 6% if we exclude the catch-up
invoicing for Santa Cruz during the second quarter of 2006, when its
marketability was acknowledged. Pebercan's net share declined slightly by 6.1%
to 2,791,128 bbl (7,647 bbl/day) with respect to 2006. The average gross oil
selling price stood at $42.61/bbl in 2007, up 17.1% from 2006.
The slight rise in overall Block 7 production is due to the fact that in
2006, cumulative production since 2004 was recognized on Santa Cruz and a
decline was recorded in Seboruco production in 2007. Excluding the stacked
invoicing for Santa Cruz, the actual increase was 6.63%. In 2007, the Company
invested in the drilling of nine new wells, the last of which was completed on
January 11, 2008. The Company invested $49.22 million in drilling in 2007,
compared with $74.7 million in 2006.
The oil production cost per barrel currently stands at $5.78, compared to
$3.83 in 2006. This increase is due to multiple factors, such as the different
kinds of technical work performed on the wells, along with tests on Canasi and
higher energy expenses. Such costs are also associated with water and gas
levels, which rose in 2007.
The Company's general expenses posted a net decline of some 17% during
this same period.
Amortization of oil properties per barrel, which stood at $44.78 million,
was just lower than in 2006 ($45.08 million) or -0.7% and at $16.05/bbl, only
5.8% higher than in 2006 ($15.17/bbl). This was due to the proportion of
investments and the slight drop in reserves.
The Company generated a net profit of $41.28 million (+35%), corresponding
to a net margin of 34.7%. Internally generated funds in 2007 stood at $91.18
million, compared with $84.51 million in 2006.
Reserves
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As at December 31, 2007, the evaluation report for Block 7 as a whole
indicated proven and probable reserves (at constant prices and costs) of
46.21 million barrels of oil, compared to 44.6 million as at December 31,
2006.
Pebercan's net share of these proven and probable reserves stood at
13.37 million barrels on December 31, 2007, compared to 15.86 million barrels
as at December 31, 2006. A drop that is solely attributable to the effect of
the sharp appreciation of the price per barrel used in the estimate, versus
the Company's net share of sharply increasing revenues. This rise in the price
of oil has, on the other hand, had a very positive influence on the Company's
discounted cash flow.
This estimate was produced by BEICIP-Franlab, a subsidiary of the Institut
Français du Pétrole. This body has over 20 years of experience in Cuba and
therefore possesses an excellent understanding of the complexity of Cuban
geology, particularly with respect to the fractured carbonated reservoirs that
serve as the source of the Company's production. BEICIP-Franlab, a body
accountable to the Canadian and international financial communities, made
these estimates in accordance with National Instrument 51-101 implemented by
the CSA (Canadian Securities Administrators).
Total proven reserves in Block 7 experienced a normal renewal rate in 2007
of 36.62 million barrels as at December 31, 2007, compared with 36.47 million
barrels of proven reserves as at December 31, 2006. Despite this maintenance
of and slight increase in total proven reserves, the share of the Company's
net proven reserves declined from 12.87 million barrels as at December 31,
2006 to 9.94 million barrels as at December 31, 2007. This decrease was
essentially due to the negative impact, estimated at 2.14 million barrels, due
to the increased share in the Company's profit oil with respect to its share
of cost oil in a high price per barrel environment.
Total probable reserves for Block 7, in turn, increased by 17.52%, namely
from 8.16 million barrels as at December 31, 2006 to 9.59 million barrels.
Pebercan's net share of probable reserves rose by 14.72%, from 2.99 million
barrels as at December 31, 2006 to 3.43 million barrels as at December 31,
2007. This increase in probable reserves despite the economic impact on the
net share allocated to the Company under the assumption of a high barrel price
is the result of the Company's significant efforts in 2007 to develop new
reserves such as the second duplex at Canasi.
Summary of oil reserves as at December 31, 2007
Constant prices and costs, before taxes
(millions of barrels) 2007 2006
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Proven net reserves(1) 9.94 12.87
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Probable net reserves(1) 3.43 2.99
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TOTAL 13.37 15.86
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(1) Net reserves: The Company's percentage of net reserves, based on its
share of the fields exploited and taking into consideration the
production-sharing mechanism (cost oil and profit oil) stipulated in
the production-sharing agreement.
Additional information on these reserves is included on the Company's
annual information, which will be published on the Web site www.sedar.com as
well as on the Company's Web site, at www.pebercan.com.
Oil production
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Block 7's total billable production (100%) went from 7.19 million barrels
in 2006 to 7.21 million barrels in 2007, increasing by an average of 19,767
barrels a day.
This slight rise is due to increased production on Santa Cruz and a
proportional drop on Seboruco.
Net production: 2,791,128 barrels, hence 7,647 barrels/ day
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Corresponds to the Company's percentage of production, based on its share
of the fields exploited and taking into consideration the stipulations of the
production-sharing agreement with regard to cost oil and profit oil (before
taxes) in Cuba.
Financial highlights:
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Pebercan Inc. Consolidated financial statements December 31
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In thousands (except data by share
and number of wells) 2007 2006
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Oil sales (gross) ($) 118,935 108,191
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Drilling services ($) -25 3,469
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Total revenue ($) 118,910 111,660
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Net earnings ($) 41,279 30,557
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Net earnings per share, basic ($) 0.55 0.42
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Net earnings per share, diluted ($) 0.55 0.40
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Internal funds before non-cash items(1) ($) 91,180 84,515
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Gross selling price of oil ($) 42.61 36.40
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Total production of Block 7
(thousands of barrels) 7,215 6,766
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Retroactive production of Santa Cruz deposit
(thousands of barrels) 423(4)
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Pebercan's share (thousands of barrels) 2,791 2,972
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Number of wells in production (end of period) 40(3) 34(2)
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Weighted average of shares in circulation:
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Basic shares 74,454,869 73,432,390
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Diluted shares 75,667,868 75,822,110
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(1) Refer to the note on measures not consistent with GAAP.
(2) Excluding two closed wells on Canasi (Canasi 4 and Canasi 2) and
production at Santa Cruz 100, 101, 300 and Tarara 100, which is not
yet marketable.
(3) Excluding two closed wells on Canasi, 1 on Seboruco, 3 on Santa Cruz
and Canasi 100, for which completion is pending.
(4) Subsequent to the notice regarding marketing of the Santa Cruz
deposit, this field's production has since the fourth quarter of 2004
been included in Block 7 billing for the second quarter of 2006.
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In thousands of $ December 31, December 31,
(except for current ratio) 2007 2006
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Cash and cash equivalents 21,741 15,212
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Working capital 103,511 59,152
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Current ratio 9.3 2.4
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Oil and gas properties 135,565 131,123
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Total assets 252,376 237,047
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Shareholders' equity 201,938 160,309
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In 2007, oil property exploration and development activities valued at
$49,226,000 ($74,684,000 in 2006) were initiated.
Post year-end events
--------------------
The 2007 consolidated balance sheet incorporates a debtor accounts
receivable amount of $61.64 million, which corresponds to late payments from
CUPET. Negotiations begun late in 2007 allowed for securing the majority of
these past due amounts.
From a sales perspective, the Gross oil sales agreement between CUPET and
Pebercan expired on December 31, 2007. The Company signed a new agreement in
this regard with CUPET on February 7, 2008, retroactive to January 1, 2008.
During the first quarter of 2008, the winding-up of Peberfin SA was
completed, as mentioned previously. A contract was simultaneously negotiated
with the company Maragest S.A., which now oversees the Group's financial and
administrative activities.
On February 18, 2008, the Company announced that two shareholders, one of
them a former Company executive and the other a former consultant for the
Company, had launched a suit against the Company, citing oppression and
seeking remedy in damages for Company shares allocated to them in the past. A
claim for around $6 million CA was filed. The Company denies the suit's merits
and is contesting it. Because the legal proceedings are at an early stage, the
Company cannot yet issue a statement with regard to the probable outcome. The
Company and its auditors, moreover, feel that it would be inappropriate and
premature to at this point plan a provision in this regard.
On February 12, 2008 the Board of Directors member from shareholder
Établissements Maurel & Prom S.A., Mr. Michel Campioni, resigned and would be
subsequently replaced by Mr. Michel Hochard.
The drilling of well STC-305, which began in 2006, was completed on
January 11, 2008. The well initially produced 100% water. Subsequent to a test
period and the isolation of the upper section of the reservoir, the well began
producing a daily average of 881 barrels of oil with a density of 10.2degrees
API. This operation was successful due to the implementation of a multi-zone
well completion suitable for complex reservoirs such as Santa Cruz. This type
of completion is already installed on wells STC-304 and STC-305, and its
generalized use is currently being reviewed.
Well Can-100 is also being studied, with the aim of developing adapted
technical solutions for ensuring the onset of production.
Pebercan retains a 60% majority interest in Canasi and a 55% majority
interest in both Seboruco and Santa Cruz. Furthermore, Pebercan continues to
be the unique representative of the Block 7 association under the
production-sharing agreement signed with Cuban authorities.
Outlook:
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Over the next few years, Pebercan intends to continue developing its
concessions in the Republic of Cuba. To this end, it plans to continue
developing the Canasi, Seboruco and Santa Cruz deposits while notably focusing
on the following primary activities:
- maintenance and production resumption for existing wells with lower
production levels or shutdowns over time;
- study and development of technical solutions, particularly with regard
to completion, in order to solve operating problems;
- the execution of any new justifiable drilling operations with the aim
of targeting zones that were poorly or not drained (infill wells);
- evaluation and development of deeper structures, farther from the
shoreline, such as the second duplex on Canasi and the deep duplex on
Seboruco;
- study of improved recovery rates using EOR (Enhanced Oil Recovery)
techniques.
This policy seeks to optimize exploitation while compensating for natural
drops in production and ensuring the long-term maintenance of existing
reserves and the development of new reserves.
The Company is making the necessary efforts to obtain access to new
exploration zones.
2008 activity plan
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The activity plan for the 2008 year rests on a multi-faceted strategy
taking into consideration various elements:
1) Santa Cruz:
A cross-functional geoscientific committee was created to study the
behaviour and productivity of wells on the Santa Cruz deposit and to
optimize drilling and completion techniques. The committee's goal is to 3
develop a static and dynamic model of the field reservoir, to evaluate
and identify the necessary repair work for certain wells, and to
determine the type, number and location of additional wells enabling the
optimized draining of the deposit.
To allow for completing these studies, drilling on Santa Cruz was
temporarily suspended. Activities are expected to resume in the second
quarter of 2008.
The Company's 2008 budget also incorporates four (4) to six (6)
maintenance actions (workovers) on existing Santa Cruz field wells, as
well as optional drilling of two (2) new wells. Confirmation will depend
on the results of the studies currently underway.
2) Canasi:
The Company has budgeted two (2) closed wells as part of its enhancement
and development of the second duplex, the focus of which is currently the
Canasi 100 well. Two (2) other optional wells are also included in the
budget, the execution of which will depend on results from the first
wells. In conjunction with its adventurer, the Company is also forging
ahead with studies on improving recovery rates through thermal mechanisms
(EOR - Enhanced Oil Recovery).
3) Seboruco:
The Company plans to drill two (2) closed wells: one (1) infill well in
the first duplex and one (1) exploration well in the deep duplex. Two (2)
optional wells, of the same types as those previously cited, are also
included in the 2008 budget. For the Company, however, execution of these
drilling activities on Seboruco is conditional on the successful
completion of upgrade activities and improvement of the capacity of the
Yumuri processing facilities.
Overall, 2008 work activities involve four (4) closed wells and six (6)
optional wells, for a total Block 7 budget of between $80 and $141 million.
This budget includes well maintenance activities (workovers), operating costs
and administrative expenses.
Pebercan retains its majority interests, notably 60% in the Canasi field
and 55% in the Seboruco and Santa Cruz fields.
Pebercan has also undertaken a policy focused on the diversification of
its oil and gas portfolio, and is currently assessing exploration and
acquisition opportunities in areas other than Cuba.
Pebercan's interim consolidated financial statements and management report
for the period ended at December 31, 2007 are available on our Web site at
www.pebercan.com, as well as on SEDAR's Web site, at www.sedar.com.
Pebercan Inc. is committed to the exploration, development and mining of
oil reserves in the Republic of Cuba. Its mining properties consist of three
concessions covering 93 km(2) and including Block 7, the only exploited
concession to date. Pebercan sells all of its production to the Cuban
government, but is not bound by any restrictions regarding the sale of its
oil. The Company stock is listed on the TSX under the symbol PBC.
Legal Notice - Forward-Looking Statements
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The forward-looking statements contained in this press release involve a
number of known and unknown risks and uncertainties as well as other factors,
the effect of which may be that the Company's actual results, performance and
accomplishments differ significantly from the future results, performance and
accomplishments stated or implied in such forward-looking statements. We
consider that these forward-looking statements are reasonable given that they
are based on hypothesis which the Board of Directors of the Company has
reviewed and determined as being well founded. The Company has no obligation
to update or modify such forward-looking statements, either as a result of new
information, future events or for any other reason, and we expressly deny any
such obligation in relation thereto. The Company's most recent annual and
interim reports and other documents filed with the relevant securities
commissions and regulators in Canada contain important additional information
on such risks and uncertainties.
ContactsRENMARK Financial Communications Inc.: Henri Perron: hperron@renmarkfinancial.com Dan Symons: dsymons@renmarkfinancial.com (514) 939-3989
Fax: (514) 939-3717
www.renmarkfinancial.com PEBERCAN Inc.: Christophe Ranger
cranger@pebercan.com
(514) 286-5200
Fax: (514) 286-5177
572.92 (5.30%)
