Atlantic Petroleum today announced its results for the first six months 2010.
Ben Arabo, Atlantic Petroleum's CEO, stated:
'With two fields now in production and an operating profit of DKK 58.1MM for the first half of 2010, Atlantic Petroleum is very well positioned to grow from the strong base that the two producing assets provide. The success on Blackbird
during the last quarter is a very important step in securing Atlantic Petroleum's near term growth. The company's debt position has changed dramatically since 2009. This strengthened position will provide a momentum for growth in the near term, and will enhance the company's options going forward. Atlantic Petroleum will use the current momentum to acquire reserves to secure near term growth and stability whilst building the exploration portfolio to provide the longer term upside. In summary, the 2Q results presented today provide a solid foundation for growth and the future of Atlantic Petroleum.'
Highlights
Operational
• Total production in 1H 2010 was 419,600 boe corresponding to an average production of 2,318 boepd (barrels of oil equivalents per day). The production in 2Q 2010 amounted to 245,635 boe (1Q 2010: 173,966 boe), corresponding to an
average of 2,699 boepd (1Q 2010: 1,933 boepd) net to Atlantic Petroleum. Production in 1H 2010 was associated with stable production from the Chestnut field while production from the Ettrick field was lower than expected, especially in Q1, due to technical problems with the production facilities
• Two production wells have been drilled and completed successfully on the Ettrick field. The 20/2a-E3Z well was a sidetrack of the 20/2a-E3 well drilled in 2007, and was drilled to optimise the location of the wellbore within the reservoir. The other production well was the 20/2a-E7Z well, drilled in a location north of the main Ettrick field. The addition of these two wells has markedly improved the production potential of the field
• The Blackbird appraisal well has been drilled over the summer and a well test was carried out during July and August to evaluate the quality of the discovery. The results to date suggest that Blackbird will probably be developed and tied back to the Ettrick production facilities. The final decision for development is anticipated to be taken later this year
• On Faroes licence 016, the seismic data acquired in 2009 have been processed and interpretation is ongoing. A sea bed sampling programme will be conducted during the next few months
• In the Irish Licence SEL 2/07 various projects have been initiated to evaluate whether it is possible to develop the Helvick and Hook Head fields via an unmanned buoy facility and whether the low API oil accumulation at Ardmore can be commercialised
• The Marten Licence has been granted a two year extension to the summer of 2012
Financial
• Revenues of DKK 104.2MM in 2Q 2010 (2Q 2009: DKK 50.0MM) and DKK 181.1MM in 1H 2010 (1H 2009: DKK 76.6MM). Average realised oil price increased to 77.64 USD/bbl in 2Q 2010 from 76.96 USD/bbl in 1Q 2010. The average realised oil
price for 1H 2010 was 77.34 USD/bbl
• Gross profit of DKK 39.5MM in 2Q 2010 (2Q 2009: DKK 15.2MM) and DKK 65.5MM in 1H 2010 (1H 2009: DKK 11.0MM)
• Operating profit (EBIT) of DKK 35.8MM in 2Q 2010 (2Q 2009: DKK -97.5MM) and DKK 58.1MM in 1H 2010 (1H 2009: DKK -112.9MM)
• Profit before taxation of DKK 76.7MM in 2Q 2010 (2Q 2009: DKK -56.9MM) and DKK 105.1MM in 1H 2010 (1H 2009: DKK -48.2MM)
• Net cash flow from operating activities in 1H 2010 of DKK 132.8MM (1H 2009: DKK 28.1MM)
• Total assets of DKK 708.7MM (At year end 2009: 646.8MM)
• Total shareholder's equity of DKK 362.6MM (at year end 2009: 279.0MM)
• General and administration costs reduced to DKK 3.5MM from DKK 4.5MM in 2Q 2009
• The bank debt as of 31st December 2009 was DKK 283.7MM of which DKK 118.7MM
was short term and DKK 165.0MM was long term debt. The Company has paid down
short term bank loans of DKK 71.7MM during the first half of 2010. By the end
of 1H 2010 the bank debt was DKK 212.0MM of which DKK 47.0MM was short term and
DKK 165.0MM long term debt. As of 18th August 2010, bank debt is DKK 187.0MM of
which DKK 22.0MM is short term and DKK 165.0 long term debt. A total of DKK
96.7MM in short term bank loans have been repaid during 2010.
2010 Outlook
Operational
• Production in the first half of 2010 amounts to 419,000 barrels of oil equivalents (boe), and total production to this date is approximately 550,000 boe. Based on improved production from Ettrick the total production for the
year is now expected to be between 850,000 - 930,000 boe
• The Blackbird appraisal well results will be evaluated in order to make a decision later in the year whether to develop the field. It is expected that the field will be tied back to the Ettrick field, which is located 6 km to the
north
• A Pre-FEED study (Pre-Front End Engineering and Design) has been initiated on the Perth field to determine whether it is feasible to develop Perth over existing infrastructure
Financial
• EBIT is expected to increase to DKK 90 - 110MM for the year 2010 compared to DKK 70 - 90MM previously announced. The guidance is based on an oil price of 76 USD/bbl in 2010 and an average currency exchange rate of DKK/USD of 5.60
• Company's debt is expected to be reduced by DKK 120MM in 2010. To this date debt is reduced by DKK 96.7MM
• Investments in exploration and appraisal activities are estimated to be around DKK 40MM for the whole year 2010
• Investments in field developments are estimated to be around DKK 57MM for the whole year 2010
• The majority of the short term bridge loan facilities have been rolled into a five year senior loan facility
• The Company has engaged in oil price hedging to secure a more stable revenue stream. Approximately 6 per cent of current production has been hedged 12 months ahead. Average oil price hedged is 87 USD/bbl